Production Management Complete Notes-1

DISHA COLLEGE BBA IV Sem
Pt.RSU syllabus
Production Management
Unit – I:
Production Management: meaning, definition, scope, importance and problems. Production
Planning and Control: objectives, functions of Production Planning and Control.
Unit – II:
Production System i.e. Continuous and Intermittent Production System, Plant Layout: factors,
types and methods, Plant Location.
Unit – III:
Aggregate Planning, Capacity Planning, Material Requirement Planning, Just in Time
Manufacturing (JIT).
Unit – IV:
Quality Control: concepts and functions of Inspection and Quality Control Department,
Statistical Quality Control, acceptance Sampling, Control charts, Total quality management
(TQM): concepts and characteristics.
Unit – V:
Work study: objectives and techniques of time study and motion study. References: 1. Industrial
Engineering; Hazra. 2. Industrial Engineering; Martand Telsang Sultan Chand & Sons. 3.
Production management ; Buffa
References:
1. Industrial Engineering; Hazra.
2. Production management anita soni.
3. Production management; Buffa

Previous year questions
UNIT:-1
1. What is production management? Give its scope, objectives and importance.

2. What is production management? Give its scope in industrial context?
3. What is PPC department is vital in any manufacturing set up?
4. Discuss production planning and control with its objectives and functions?
5. What is production planning and control, Discuss its objectives and functions and applications in brief?
6. “Production management is process of planning, organising and controlling the activities of production
functions”. Explain
7. What is the need of PPC in an organisation? explain its objectives
8. Discuss the nature and scope of production management.
9. Write a detailed note on production planning and control.
10. Production is value addition process, comment with examples?
UNIT 2
1. Define production system with its characteristics features and various types?
2. What is meant by Plant Location? State the steps in Plant location?
3. What is meant by Plant layout? Explain the various types of plant Layout?
4. Define the Process Layout? State the reasons for revision of Layout?
5. What is continuous production system? Explain its characteristics
6. Define the term plant location. Describe the factors in selecting plant location?
7. What do you understand by production system? Describe different types of production system .
8. Define production system, diffentiate between continuos production system and intermittent
production system?
9. Define Plant Layout, Explain factors & types
10. Define the term plant location. Describe the factors in selecting plant location?
UNIT 3
1. Define capacity Planning?describe various steps involve in cap capacity Planning.

2. JUST IN TIME (JIT) manufacturing is a philosophy rather than technique” elucidate the basic
elements of JIT?
3. What is Aggregate planning? Discuss its procedure in detail.
4. What is Material requirement planning? What are its objectives?
5. Explain in details steps involved in capacity planning?
6. Explain Material requirement planning, capacity requirement planning and bills of materials.
discuss how MRP is different from inventory control system?
7. Write a detailed note on MRP(Material requirement planning)
8. Describe in details about just in time (JIT)
9. Explain the following:

a) Aggregate planning
b) capacity Planning
10. Write short note on the following. (Any 2)
a) Material requirement planning
b) Just in time
UNIT 4
1. Define the concept of Quality control and explain acceptance sampling procedure?
2. Write short notes on
Total Quality Management
Types of control charts
3. Explain statistical quality control. Discuss its various techniques in brief?
4. Explain the concept and characteristics of Total Quality Management
5. Write a detailed note on statistical quality control?
6. Discuss the concept characteristics of Total Quality Management?
7. What are Control charts? Discuss in detail the different types of control charts?
8. What is Quality Control? How are they formed and how can they be made more effective?
9. Discuss in detail Acceptance sampling? How it is under gone in Quality management?
10. What is Total quality management? What are its key components?
UNIT 5
1. “Work study is a powerful tool for improving productivity”. Explain

2. Discuss motion and time study with applications?
3. Explain the concept of work study. Also explain its importance from workers as well as management
point of view?
4. Write short notes on
a) Motion study
b) Time study
5. “Work study forms the basis for work system design” comment. Explain the procedure of work study?
6. What is motion study .discuss its application?
7. Work study is a powerful tool for improved productivity”. Comment
8. Write a detailed note on motion study?
9. What are the important techniques of work measurement? explain
10. Explain the following
a) Method study
b) work measurement
Unit – I
Production Management: meaning, definition, scope, importance and problems. Production Planning and
Control: objectives, functions of Production Planning and Control.
INTRODUCTION
Production management is a branch of management which is related to the production function.

Production may be referred to as the process concerned with the conversion inputs (raw materials,
machinery, information, manpower, and other factors of production) into output (semi finished and
finished goods and services) with the help of certain processes (planning, scheduling and controlling etc.)
while management is the process of exploitation of these factors of production in order to achieve the
desired results. Thus production management is the management which by scientific planning and
regulation sets into motion the part of an enterprise to which it has been entrusted the task of actual
transformation of inputs into output.
The systems aspects of manufacturing are more important than ever today. The word ‘manufacturing ‘was
originally derived from two Latin words ‘manus’ (hand) and ‘factus’(make), so that the combination
means ‘make by hand’.
In this way manufacturing was accomplished when the word first appeared in English around 1567.
Commercial goods of those times were made by hand. The methods were handicraft, accomplished in
small shops and the goods were relatively simple. As many years passed, the products become more
complex along with processes. Thus factories were developed with many workers at a single site; the
work was organized using machines
Modern manufacturing enterprises that manage these production systems must cope with the economic
realities of the modern world. These realities include the following:
Globalization• International outsourcing• Local outsourcing• Contract manufacturing• Trend toward

the service sector• Quality expectations• Operational efficiency•
MEANING OF PRODUCTION
Production is an intentional act of producing something in an organized manner. It is the fabrication of a

physical object through he use of men, material and some function which has some utility e.g. repair of an
automobile, legal advice to a client, banks, hotels, transport companies etc. Thus irrespective of the nature
of organization, production is some act of transformation, i.e. inputs are processed and transformed into
some output.
The main inputs are property machinery, consumables, management, material, land, labour and capital.
Thus the basis of Production is the transformation of inputs into goods and services. The main objectives
of a production process are:
(i) Optimum use of resources at optimum cost.
(ii) Manufacture of the desired quality and quantity of goods and services.
Production management is a branch of management which is related to the production function.

Production may be referred to as the process concerned with the conversion inputs (raw materials,
machinery, information, manpower, and other factors of production) into output (semi finished and
finished goods and services) with the help of certain processes (planning, scheduling and controlling etc.)
while management is the process of exploitation of these factors of production in order to achieve the
desired results. Thus production management is the management which by scientific planning and
regulation sets into motion the part of an enterprise to which it has been entrusted the task of actual
transformation of inputs into output.
A few definitions of production management are being reproduced hereunder to understand the Meaning
of the term clearly:
(i) “Production management then becomes the process of effectively planning and regulating the
operations of that part of an enterprise which is responsible for actual transformation of materials into
finished products”.
The definition seems to be quite incomplete as it ignores the human factors involved in a production
process and lays stress only on the materialistic features.
Elwood S. Buffa has defined the term in a broader sense as :
(ii) “Production management deals with decision making related to production process so that the
resulting goods or services are produced according to specifications in amounts and by the schedules
demanded, and at a minimum cost”.
Thus production management is concerned with the decision making regarding the production of goods
and services at a minimum cost according to the demands of the customers through the management
process of planning, organizing and controlling. In order to attain these objectives, effective planning and
control of production activities is very essential. Otherwise, the customers shall remain unsatisfied and
ultimately certain-activities may have to be closed.
Production management, thus, is assigned with the following tasks –
(i) Specifying and accumulating the input resources, i.e., management, men, information, materials,
machine and capital.
(ii) Designing and installing the assembly or conversion process to transform the inputs into output, and
(iii) Coordinating and operating the production process so that the desired goods and services may be
produced efficiently and at a minimum cost.
Production management is ‘a process of planning, organizing, directing and controlling the activities of
the production function. It combines and transforms various resources used in the production subsystem
of the organization into value added product in a controlled manner as per the policies of the
organization’.
❖ Objectives Of The Production Management

The objective of the production management is ‘to produce goods services of right quality and quantity at
the right time and right manufacturing cost’.
1. RIGHT QUALITY
The quality of product is established based upon the customer’s needs. The right quality is not necessarily
best quality. It is determined by the cost of the product and the technical characteristics as suited to the
specific requirements.
2. RIGHT QUANTITY
The manufacturing organization should produce the products in right number. If they are produced in
excess of demand the capital will block up in the form of inventory and if the quantity is produced in
short of demand, leads to shortage of products.
3. RIGHT TIME
Timeliness of delivery is one of the important parameter to judge the effectiveness of production
department. So, the production department has to make the optimal utilization of input resources to
achieve its objective.
4. RIGHT MANUFACTURING COST
Manufacturing costs are established before the product is actually manufactured. Hence, all attempts
should be made to produce the products at pre-established cost, so as to reduce the variation between
actual and the standard (pre-established) cost.
Characteristics of production management

1. Production Management is the process of effective planning
It helps in regulating the operations of that section of an enterprise which is responsible for the actual
transformation of materials into finished products.
2. Related to the production process.
goods and services are produced in accordance with the quantitative specifications and demand schedule
with minimum cost.
3. Production Management is a set of general principles for production
Production management has a set of certain principles like economies, facility design, job design,
schedule design, quality control, inventory control, work study and cost and budgetary control.
 Differences between Manufacturing vs. Production

The critical differences between Manufacturing vs. Production are as follows –
1. Manufacturing is the process where machines produce goods from raw materials. Production is
the process of converting resources into finished products.
2. Manufacturing includes the production of goods which can be immediately sold off and are
suitable for use. Production essentially means the creation of utility.
3. In the case of manufacturing, the use of machinery is mandatory, whereas, in the case of
production, machinery is not essential.
4. For manufacturing, the output is tangible, whereas in production, the output which can be
tangible or intangible.
5. In the case of manufacturing, both labor and machinery setup is mandatory, but in the case of
production, only labor is necessarily required.
6. All kinds of manufacturing are considered to be produced, but all types of production are not
considered manufacturing.
7. For manufacturing, the result is essential goods, but for production, the result may be goods or
services.
8. In the case of manufacturing, raw materials need to be procured from outside. Whereas in the
case of producing, the raw material is processed for getting the output, and procurement of raw
material is not required.
SCOPE OF PRODUCTION MANAGEMENT
Production management is mainly associated with the factory management crept with the development of
factory system. Before the evolution of factory system, manufacturing activities were carried on by single
person that posed no or very insignificant problem of production and therefore question of production
management did not arise. But with the inception of factory system, the situation changed and so many
problems of production were begun to creep up and necessity arose to tackle with the problems of quality
control, layout facilities, meeting the schedules and organization of production activities.
Thus the scope of production management began to develop. In early stage, the stress was on controlling
the labour costs because labour cost was the major element of the total cost of production. With the
continuing development of factory system, the trend towards mechanization and automation developed
and it resulted in the increased costs of indirect labour higher than the direct labour costs. So concerns
found it difficult to run the business in these circumstances and evolved many controlling devices to
regulate the cost of production. They had developed devices like designing and packing of products,
indirect labour cost control, production & inventory control and quality control.
Since the level of production has increased tremendously, so many other production problems have been
added to its scope. In the present era of intense competition, the scope of production management is very
wide. The production department in an enterprise is not only concerned with the full exploitation of
production facilities but also the human factor that indirectly affects the production, utilization of latest
techniques of production and the production of quality goods to the satisfaction of customers of the
product.
The various activities that form scope of production function can be studied in the following broad areas :
1. Product Selection and Design :
The product mix makes the production system either efficient or inefficient. Choosing the right products,
keeping the mission and overall objectives of the organization in mind is the key to success. Design of the
product, which gives it enough functional and aesthetic value, is of paramount importance. It is the design
of the product which makes the organization competitive or noncompetitive. Value engineering does help
to retain enough features, while eliminating the unnecessary ones.
2. Activities Relating to Production System Designing :
Decision related to the production system design is one of the most important activity of the production
management. This activity is related to production engineering and includes problems regarding design of
tools and jigs, the design, development and installation of equipment and the selection of the optimum
size of the firm. All these areas require the technical expertise on the part of the production manager and
his staff.
3. Facilities Location:
The selection of an optimum plant location very much depends upon the decision taken regarding
production engineering. A wrong decision may prove disastrous. Location should as far as possible cut
down the production and distribution cost. There are diverse factors to be considered for selecting the
location of a plant.
4. Method Study :
The next decision regarding production system design concerns the use of those techniques which are
concerned with work environment and work measurement. Standard methods should be devised for
performing the repetitive functions efficiently. Unnecessary movements should be eliminated and suitable
positioning of the workers for different processes should be developed. Such methods should be devised
with the help of time study and motion study. The workers should be trained accordingly.
5. Facilities Layout and Materials Handling :
Plant layout deals with the arrangements of machines and plant facilities. The machines should be so
arranged that the flow of production remains smooth. There should not be overlapping, duplication or
interruption in production flow. Product layout, where machines are arranged in a sequence required for
the processing of a particular product, and process layout, where machines performing the similar
processes are grouped together are two popular methods of layout. The departments are laid out in such a
way that the cost of material handling is reduced. There should be proper choice of materials handling
equipment. These days, computer software is available for planning the process layout (e.g. CRAFT,
CORELAP etc.). Group Technology (G.T.), Cellular Manufacturing Systems (CMS) and Flexible
Manufacturing Systems (FMS) have made our concepts of layout planning undergo a tremendous change.
6. Capacity Planning :
This deals with the procurement of productive resources. Capacity refers to a level of output of the
conversion process over a period of time. Full capacity indicates maximum level of output. Capacity is
planned for short-term as well as for long term. Process industries pose challenging problems in capacity
planning, requiring in the long run, expansion and contraction of major facilities in the conversion
process. Some tools that help us in capacity planning are marginal costing (Break Even Analysis),
learning curves, linear programming, and decision trees.
7. Production Planning :
The decisions in production planning include preparation of short-term production schedules, plan for
maintaining the records of raw materials, finished and semi-finished stock, specifying how the production
resources of the concern are to be employed over some future time in response to the predicted demand
for products and services. Production planning takes a given product or line of products and organizes in
advance the manpower, materials, machines and money required for a predetermined output in a given
period of time. Thus, production planning is a management technique which attempts to gain the best
utilization of a firm’s manufacturing facilities. It is gained by the integration and coordination of the
manpower, machines, materials and plant services employed in the manufacturing cycle.
8. Production control :
After planning, the next managerial production function is to control the production according to the
production plans because production plans cannot be activated unless they are properly guided and
controlled. For this purpose, production manager has to regulate work assignment, review work process,
check and remove discrepancies, if any, in the actual and planned performances.
According to Soriegel and Lansburgh “Production control is the process of planning production in
advance of operations; establishing the exact route of each individual item, part or assembly; setting,
starting and finishing dates for each important item, assembly and the finished products; and releasing the
necessary orders as well as initiating the required follow-up to effect the smooth functioning of the
enterprise”.
Thus production control involves the following stages :

(i) Planning — setting targets of production.
(ii) Routing — to decide the route or flow-of production activity.
(iii) Dispatching — to issue materials and authorizations for the use of machines and plant services.
(iv) Follow-up — it compares the actual production with the targeted production. Deviations are found
out and corrected and reasons are investigated.
9. Inventory Control:
Inventory control deals with the control over rawmaterials, work-in-progress, finished products, stores,
supplies, tools, and so is included in production management. The raw materials, supplies etc. should be
purchased at right time, of right quality, in right quantity, from right source and at right price. This five
‘R’s consideration enables the scientific purchases.
Store-keeping is also an important aspect of inventory control. The raw materials, work-in-progress,
finished goods, supplies, tools etc. should be stored efficiently. The different levels of inventory should be
managed properly and the issue of materials to departments should be made promptly and effectively.
Proper records should also be kept for various items of inventory control.
The production manager has to look after the inventory control activities at three levels –
(i) Control of inventories such as raw materials, purchased parts, finished goods and supplies through the
inventory control technique;
(ii) Control of flow of materials into the plants through the technique of judicious purchasing;
(iii) Control of work-in-progress through production control.
10. Quality control :
The other important decision taken by the production manager concerns quality control. Product quality
refers to the composite product characteristics of engineering and manufacturing that determines the
degree to which the product in use will meet the expectations of the customers. Quality control can be
ensured through the techniques of inspection and statistical quality control.
11. Maintenance and Replacement :
In this we cover preventive methods to avoid machine break-downs, maintenance, policies regarding
repair and replacement decisions. Maintenance manpower is to be scheduled and repair jobs are to be
sequenced. There are some preventive replacements also. Machine condition is to be constantly
monitored. Effective maintenance is a crucial problem for India which can help better capacity utilization
and make operations systems productive enough.
12. Cost Reduction and Control :
Cost reduction ultimately improves productivity. The industry becomes competitive. Essentially cost
reduction and cost elimination are productivity techniques. Value engineering, budgetary control,
standard costing, cost control of labour and materials etc. help to keep costs optimal. All Production
decisions are subject to control measures, after receiving proper feed-back. Control function is exercised
over the quantity to be produced, quality expected, time needed, inventory consumed & carried and costs
incurred. Control system is designed after due cost benefit analysis. Controls should be selective. A self-
controlling cybernetic system though preferable is not possible in all complex industries.
Production Management is a vast concept it involves a huge chain. Production starts with input and ends
with output i.e finished product. Following are the scope of production management
1. Location of Facilities
The selection of location is a key decision as large investment is made in building, land, and machinery.
2. Plant Layout & material handling
Plant layout refers to the physical arrangement of facilities. Material handling refers to the moving of
material from the storeroom to the machine & from machine to the next during the process of
manufacturing.
3. Product Design
Product design deals with the conversion of the ideas about the product into the reality
4. Process Design
It is the decision making on overall process route for converting the raw material into the finished goods
5. Production Planning & Controlling ( P.P.C)
P.P .C can be defined as the process of planning the production in advance, setting the exact route of each
item, fixing the starting & finishing dates for each item to give production orders to shops & to follow up
the progress of products according to the orders.
6. Quality Control
Quality control may be defined as a system that is used to maintain a desired level of quality in a product
& service.
7. Material Handling
Material management is that aspect of management function which is primarily concern with the
acquisition control & use of the needed material.
8.Maintenance Management
Maintenance deal with taking care of factory layout, types of machinery. This is essential for equipment
& machinery which are a very important part of the total production process.
Functions of production management
The components or functions of production management are as follows:
1. Selection of Product and Design,

2. Selection of Production Process,
3. Selecting Right Production Capacity,
4. Production Planning,
5. Production Control,
6. Quality and Cost Control,
7. Inventory Control, and
8. Maintenance and Replacement of Machines
The above functions of production management are briefly discussed below.
1. Selection of Product and Design
Production management first selects the right product for production. Then it selects the right design for
the product. Care must be taken while selecting the product and design because the survival and success
of the company depend on it. The product must be selected only after detailed evaluation of all the other
alternative products. After selecting the right product, the right design must be selected. The design must
be according to the customers' requirements. It must give the customers maximum value at the lowest
cost. So, production management must use techniques such as value engineering and value analysis.
2. Selection of Production Process
Production management must select the right production process. They must decide about the type of
technology, machines, material handling system, etc.
3. Selecting Right Production Capacity
Production management must select the right production capacity to match the demand for the product.
This is because more or less capacity will create problems. The production manager must plan the
capacity for both short and long term's production. He must use break-even analysis for capacity
planning.
4. Production Planning
Production management includes production planning. Here, the production manager decides about the
routing and scheduling. Routing means deciding the path of work and the sequence of operations. The
main objective of routing is to find out the best and most economical sequence of operations to be
followed in the manufacturing process. Routing ensures a smooth flow of work. Scheduling means to
decide when to start and when to complete a particular production activity.
5. Production Control
Production management also includes production control. The manager has to monitor and control the
production. He has to find out whether the actual production is done as per plans or not. He has to
compare actual production with the plans and finds out the deviations. He then takes necessary steps to
correct these deviations.
6. Quality and Cost Control
Production management also includes quality and cost control. Quality and Cost Control are given a lot of
importance in today's competitive world. Customers all over the world want good-quality products at
cheapest prices. To satisfy this demand of consumers, the production manager must continuously improve
the quality of his products. Along with this, he must also take essential steps to reduce the cost of his
products.
7. Inventory Control
Production management also includes inventory control. The production manager must monitor the level
of inventories. There must be neither over stocking nor under stocking of inventories. If there is an
overstocking, then the working capital will be blocked, and the materials may be spoiled, wasted or
misused. If there is an understocking, then production will not take place as per schedule, and deliveries
will be affected.
8. Maintenance and Replacement of Machines
Production management ensures proper maintenance and replacement of machines and equipments. The
production manager must have an efficient system for continuous inspection (routine checks), cleaning,
oiling, maintenance and replacement of machines, equipments, spare parts, etc. This prevents breakdown
of machines and avoids production halts.
Importance of Production Management

1. Helps to Introduce New Products: Production management helps to introduce new product within the
market. It conducts analysis and development. This helps the firm to develop newer and higher quality
product. These products are productive within the market as a result of the offer full satisfaction to the
purchasers. Business Management
2. Expansion of the Firm: the production management helps the firm to get bigger and grow. This is
often as a result of it tries to enhance quality and cut back prices. This helps the firm to earn higher
profits. These profits facilitate the firm to expand and grow.Importance of Production Management.
3. Minimizes price of Production: Production management helps to reduce the value of production. It
tries to maximize the output and minimize the inputs. This helps the firm to attain its price reduction and
potency objective.
4. Accomplishment of Firm’s Objectives: Production management helps the business organization to

attain all its objectives. It produces product that satisfy the customer’s wants and needs. So, the firm can
increase its sales. This can facilitate it to attain its objectives.
5. Reputation, Goodwill and Image: Production management helps the firm to satisfy its customers. This
will increase the firm’s name, goodwill and image. an honest image helps the firm to expand and grow.
6. Helps to Face Competition: Production management helps the firm to face competition within the
market. This can be as a result of production management produces product of right amount, right
quality, and right value and at the correct time. These product are delivered to the purchasers as per their
necessities.
7. Optimum Utilization of Resources: Production management facilitates optimum utilization of

resources like work force, machines etc. therefore the firm will meet its capability utilization objective.
this may bring higher returns to the organization.
8. Supports different useful Areas: Production management supports different useful areas in a
corporation, like selling, finance and personnel. The marketing department can notice it easier to sell
good-quality product and therefore the finance department can get a lot of funds as a result of increase
in sales. it’ll conjointly get a lot of loans and share capital for enlargement and modernization. The staff
office are going to be ready to manage the human resources effectively because of the higher
performance of the production department. There is more information about Why Should Managers
Plan in Business?
Problems of Production Management
Production management comprises decision-making concerned with production process resulting in the
production of the wanted things under limited cost and according to time schedule. As such, we have to
make two main types of decisions-one for the design of the system and the other related to the operation
and control of the system inclusive of long-run and short-run decisions.
We will have to give emphasis on the factors of cost, service and reliability of both functional and time
performance that depend on the basic policy of the whole concern and the general nature of production
of goods or services to be rendered. In this way, generally, economic concerns will most emphasize cost
based upon quality and delivery of goods.
Long-run decisions based on the production design system will be as given below:
(i) Selection of the product – First of all the product is to be selected to the requirements of people to
fetch more appeal.
(ii) Design of the product – Selection and design are greatly related mutually. They hay; interactions of
strong nature with capability of the product. The design will create the appreciation of the people.
(iii) Selection of equipment and processes – There are many equipment and processes. The equipment
and processes should be such that concern can cope up within its capital limit prescribed for the
equipment and processes should be such to cope up the design.
(iv) Production design of items processed – Production cost interacts greatly with the design of parts,
products, paper work forms. Design decision mostly set the limiting characteristics of cost and
processing of the system.
(v) Job design – Total system design includes many things of which job design is an integral part. It
involves the basic organization of work and the integration of human engineering data to produce
designed jobs optimally.
(vi) Site of the industry and business-The decisions about location of the system play an important
part if the balance of cost factors determined by nearness to markets and material supply is critical.
Location should be near to market so that the transportation expenses are not more and supply of
material does not pose any great problem due to seasons.
(vii) Facility layout-All decisions regarding design capacity, basic modes of production shifts, use of
overtime and subcontracting must be seen. Besides operations and equipment must be situated in a
pattern that lessens overall material handling cost or meets the needs of some more complicated
criterion. The latter need is most difficult for the complex intermittent model where routes change.
Many detailed problems are connected with each other so as to specify sufficiently the layout of a
production system. These include heating, lighting and other utility needs, the allocation of storing
space and the design of the building to accommodate the layout.
Short-run decisions concerning the design of operation and control systems are follows
(i) Inventory control—Decisions should be made regarding inventory at demand.

(ii) Production control—Decisions should be made relating to allocation of productive capacity

consistent with demand and inventory policy. Feasible schedules must be worked out, and the load on
men and machines and the law of production should be in control.
(iii) Maintenance and reliability of the systems—Decisions should be done for the efforts of
maintenance, recognition of the machine downtime may itself be connected with important costs of
loss of sales.
(iv) Quality control—While controlling the quality care should be taken that defective parts are not
produced and shipped. If at all it should be seen that errors arc tolerable and the good parts are sent.
Inspection should be done and covered in the cost against probable losses due to passing defective
material or services.
(v) Labor control—Most products need labor and it costs much for services. Production planning needs
labor appraisal and so we find much efforts is wasted to develop work measurement and wage payment
systems.
(vi) Cost control and improvement—It is the duty of the production supervisors to see that daily
decisions regarding the balance of labor, material and overhead costs are done to the satisfaction upto
minimum. The individual production systems change these factors important in production
management. No doubt every system faces these problem to some extent in common. However
individual differences can also be there.
Responsibilities of a Production Manager
Some of the major responsibilities of a production manager are:
(1) Production planning (5) Inventory control
(2) Production control (6) Plant layout
(3) Quality control (7) Work measurement
(4) Method analysis (8) Other functions:
(1) Production planning:
Production planning is the first function performed by the production manager.Production planning is
concerned with thinking in advance what is to be produced, how it is to be produced and by what time
should it be produced. It is concerned with deciding about the production targets to be achieved by
keeping in view the sales forecasts.
(2) Production control:

Production planning cannot be properly achieved without an effective system of production control. It is
in fact concerned with successful implementation of production planning. It aims at completing
production well in time and also with lesser costs. A proper system of production control ensures
continuous production, lesser work-in-progress and minimisation of wastages.
(3) Quality control:
The production manager is also concerned with maintaining required quality of the product. Quality
control is concerned with controlling the negative variables which affect the ultimate quality of a product.
It is concerned with use of all the ways and means where by quality standards could be maintained.
(4) Method analysis:
There are many alternative methods for manufacturing a product. Some methods are more economical
than others. The production manager should study all the methods in detail by analysing them in detail
and select the best alternative out of them. The process of selecting the best alternative is known as
methods of analysis.
Methods of analysis are considerably helpful in minimising the cost of production and improving
productivity of the concern.
(5) Inventory control:
The next important function to be carried by a production manager is to exercise proper control over the
inventory. He should determine economic order size, maximum, minimum, average and danger levels of
materials so that problems of overstocking and understocking do not arise. This also helps in minimising
wastages of materials.
(6) Plant layout:
Plant layout is primarily concerned with the internal set up of an enterprise in a proper manner. It is
related to orderly and proper arrangement and use of available resources viz., men, money, machines,
materials and methods of production inside the factory. In other words it is concerned with maximum and
effective utilisation of available resources at minimum operating costs.
(7) Work measurement:
Work measurement methods are concerned with measuring the level of performance of work by a worker.
Time and motion studies techniques can be used for work measurement. If a worker works below the
level fixed by work-measurement techniques, his performance must be improved through positive or
negative incentives.
(8) Other functions:
Apart from the above-mentioned functions, the production Department also carries certain other functions
viz., cost control, standardisation and storage, price analysis and provision of wage incentives to workers
etc.
Production Planning and Control: Meaning, Characteristics and

Objectives.
Meaning:
Production planning and control is an important task of Production Manager. It has to see that production
process is properly decided in advance and it is carried out as per the plan. Production is related to the
conversion of raw materials into finished goods. This conversion process involves a number of steps such
as deciding what to produce, how to produce, when to produce, etc. These decisions are a part, of
production planning. Merely deciding about the task is not sufficient.
The whole process should be carried out in a best possible way and at the lowest cost. Production
Manager will have to see that the things proceed as per the plans. This is a control function and has to be
carried as meticulously as planning. Both planning and control of production are necessary to produce
better quality goods at reasonable prices and in a most systematic manner.
Production planning is the function of looking ahead, anticipating difficulties to be faced and the likely
remedial steps to remove them. It may be said to be a technique of forecasting ahead every step in the
long process of production, taking them at a right time and in the right degree and trying to complete the
operations at maximum efficiency. Production control, on the other hand, guides and directs flow of
production so that products are manufactured in a best way and conform to a planned schedule and are of
the right quality. Control facilitates the task of manufacturing and see that everything goes as per the
plans.
Goldon B. Carson:
“Production planning and control involves generally the organization and planning of the manufacturing
process. Specifically, it consists of the planning of the routing, scheduling, dispatching and inspection, co-
ordination and the control of materials, methods, machines, tooling and operating times. The ultimate
objective is the organization of the supply and movement of materials and labour, machine utilization and
related activities, in order to bring about the desired manufacturing results in terms of quantity, time and
place.”
James L. Lundy:
“Basically, the production control function involves the co-ordination and integration of the factors of
production for optimum efficiency. Overall sales orders or plans must be translated into specific
schedules and assigned so as to occupy all work centres but overload none. The job can be done formally
in which case elaborate charting and filing techniques are used ; or it can be done informally, with
individuals’ thoughts and retention there of supplanting tangible aids.”
Charles A. Koepke:
“Production planning and control is the coordination of a series of functions according to a plan which
will economically utilize the plant facilities and regulate the orderly movement of goods through the
entire manufacturing cycle, from the procurement of all materials to the shipping of finished goods at a
predetermined rate.”
▪ Characteristics of Production Planning and Control:

The forgoing discussion brings out the following traits of production planning and control:
1. It is the planning and control of manufacturing process in an enterprise. The questions like—What is to
be manufactured? When it is to be manufactured? How to keep the schedule of production etc.? —are
decided and acted upon for getting good results.
2. All types of inputs like materials, men, machines are efficiently used for maintaining efficiency of the
manufacturing process.
3. Various factors of production are integrated to use them efficiently and economically.
4. The manufacturing process is organized in such a way that none of the work centres is either
overworked or under worked. The division of work is undertaken very carefully so that every available
element is properly utilized.
5. The work is regulated from the first stage of procuring raw materials to the stage of finished goods.
▪ Objectives of Production Planning and Control:

Planning of production precedes control. Whatever is planned needs to be controlled. The ultimate
objective of both planning and control is to use various inputs in an efficient way and to have a proper
control over various targets and schedules fixed earlier.
The following details will bring out the objectives of production planning and production control:
Production Planning:
1. To determine the requirements for men, materials and equipment.
2. Production of various inputs at a right time and in right quantity.
3. Making most economical use of various inputs.
4. Arranging production schedules according to the needs of marketing department.
5. Providing for adequate stocks for meeting contingencies.
6. Keeping up-to-date information processes.
Production Control:
1. Making efforts to adhere to the production schedules.

2. Issuing necessary instructions to the staff for making the plans realistic.
3. To ensure that goods produced according to the prescribed standards and quality norms
4. To ensure that various inputs are made available in right quantity and at proper time.
5. To ensure that work progresses according to the predecided plans.
Production planning and control is a predetermined process which includes the use of human
resource, raw materials, machines etc. PPC is the technique to plan each and every step in a long
series of separate operation. It helps to take the right decision at the right time and at the right place to
achieve maximum efficiency.
Objectives of Production Planning & Control

The objectives of PPC are as follows:
1. To ensure safe and economical production process
2. To effectively utilize plant to maximize productivity
3. To maximize efficiency by proper coordination in production process
4. To ensure proper delivery of goods
5. To place the right man for the right job, at right time for right wages.
6. To minimize labor turnover
7. To reduce the waiting time
Main elements of Production Planning & Control.
The following are main elements of Production Planning and Control.
Routing Inspection
Loading Corrective
Scheduling Follow up
Dispatching
1. Routing
It is about selection of path or route through which raw materials pass in order to make it into a
finished product. The points to be noted while routing process are – full capacity of machines,
economical and short route and availability of alternate routing. Setting up time for the process for
each stage of route is to be fixed. Once overall sequence are fixed, then the standard time of
operations are noted using work measurement technique.
2. Loading and scheduling
Loading and Scheduling are concerned with preparation of workloads and fixing of starting and
completing date of each operation. On the basis of the performance of each machine, loading and
scheduling tasks are completed.
3. Dispatching
Dispatching is the routine of setting productive activities in motion through the release of orders and
instructions, in accordance with previously planned time and sequence, embodied in route sheet and
schedule charts. It is here the orders are released.
4. Expediting / Follow-up
It is a control tool which brings an idea on breaking up, delay, rectifying error etc., during the
progress of work.
5. Inspection
Inspection is to find out the quality of executed work process.
6. Corrective
At evaluation process, a thorough analysis is done and corrective measures are taken in the weaker
spots.
Stages of Production Planning & Control
Production Planning & Control is done in three stages namely,
1. Pre-planning
2. Planning
3. Control.
Stage 1: Pre-Planning
Under this phase of production planning, basic ground work on the product design, layout design and
work flow are prepared. The operations relating to the availability scope and capacity of men, money
materials, machines, time are estimated.
Stage 2: Planning
This is a phase where a complete analysis on routing, estimating and scheduling is done. It also tries
to find out the areas of concern for short time and long time so that prominent planning can be
prepared.
Stage 3: Control
Under this phase, the functions included are dispatching, follow up, inspection and evaluation. It tries
to analyze the expedition of work in progress. This is one of the important phases of the Production
Planning and Control.
Unit – II:
Production System i.e. Continuous and Intermittent Production System, Plant Layout: factors,
types and methods, Plant Location.
Production System i.e. Continuous and Intermittent Production System
The production system of an organization is that part, which produces products of an

organization. It is that activity whereby resources, flowing within a defined system, are
combined and transformed in a controlled manner to add value in accordance with the policies
communicated by management. A simplified production system is shown above.
The production system has the following characteristics:
1. Production is an organized activity, so every production system has an objective.

2. The system transforms the various inputs to useful outputs.
3. It does not operate in isolation from the other organization system.
4. There exists a feedback about the activities, which is essential to control and improve system
performance.
Production System in Production and Operation Management
The production system of an organization is that part, which produces products of an organization. It is
that activity whereby resources, flowing within a defined system, are combined and transformed in a
controlled manner to add value in accordance with the policies communicated by management. A
simplified production system is shown above .
▪ Classification of Production System
Production systems can be classified as Job Shop, Batch, Mass and Continuous Production systems.
JOB SHOP PRODUCTION
Job shop production are characterized by manufacturing of one or few quantity of products designed and
produced as per the specification of customers within prefixed time and cost. The distinguishing feature
of this is low volume and high variety of products.
A job shop comprises of general purpose machines arranged into different departments. Each job
demands unique technological requirements, demands processing on machines in a certain sequence.
▪ Characteristics
The Job-shop production system is followed when there is:
1. High variety of products and low volume.

2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge because of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of each product, capacities for each
work centre and order priorities.
▪ Advantages
Following are the advantages of job shop production:
1. Because of general purpose machines and facilities variety of products can be produced.
2. Operators will become more skilled and competent, as each job gives them learning
opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for creative methods and innovative ideas.
▪ Limitations
Following are the limitations of job shop production:
1. Higher cost due to frequent set up changes.

2. Higher level of inventory at all levels and hence higher inventory cost.
3. Production planning is complicated.
4. Larger space requirements.
BATCH PRODUCTION
Batch production is defined by American Production and Inventory Control Society (APICS) “as a form
of manufacturing in which the job passes through the functional departments in lots or batches and each
lot may have a different routing.”It is characterized by the manufacture of limited number of products
produced at regular intervals and stocked awaiting sales.
▪ Characteristics
Batch production system is used under the following circumstances:
1. When there is shorter production runs.

2. When plant and machinery are flexible.
3. When plant and machinery set up is used for the production of item in a batch and change of set
up is required for processing the next batch.
4. When manufacturing lead time and cost are lower as compared to job order production.
▪ Advantages
Following are the advantages of batch production:
1. Better utilization of plant and machinery.

2. Promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process number of products.
6. Job satisfaction exists for operators.
▪ Limitations
Following are the limitations of batch production:
1. Material handling is complex because of irregular and longer flows.

2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production.
4. Higher set up costs due to frequent changes in set up.
MASS PRODUCTION
Manufacture of discrete parts or assemblies using a continuous process are called mass production. This
production system is justified by very large volume of production. The machines are arranged in a line or
product layout. Product and process standardization exists and all outputs follow the same path.
▪ Characteristics
Mass production is used under the following circumstances:
1. Standardization of product and process sequence.

2. Dedicated special purpose machines having higher production capacities and output rates.
3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and without any back tracking.
8. Production planning and control is easy.

9. Material handling can be completely automatic.
▪ Advantages
Following are the advantages of mass production:
1. Higher rate of production with reduced cycle time.

2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.
▪ Limitations
Following are the limitations of mass production:
1. Breakdown of one machine will stop an entire production line.

2. Line layout needs major change with the changes in the product design.
3. High investment in production facilities.
4. The cycle time is determined by the slowest operation.
CONTINUOUS PRODUCTION
Production facilities are arranged as per the sequence of production operations from the first operations to
the finished product. The items are made to flow through the sequence of operations through material
handling devices such as conveyors, transfer devices, etc.
▪ Characteristics
Continuous production is used under the following circumstances:
1. Dedicated plant and equipment with zero flexibility.

2. Material handling is fully automated.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with final product.
5. Planning and scheduling is a routine action.
▪ Advantages
Following are the advantages of continuous production:
1. Standardization of product and process sequence.

2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as it is completely automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production.
▪ Limitations
Following are the limitations of continuous production:
1. Flexibility to accommodate and process number of products does not exist.

2. Very high investment for setting flow lines.
3. Product differentiation is limited.
Types of production system
The types of production system are depicted in the following image.
The types of production system are grouped under two categories viz.,
1. Intermittent production system, and

2. Continuous production system.
Intermittent production system
Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed)
intervals (time gaps).
In the intermittent production system, goods are produced based on customer's orders. These
goods are produced on a small scale. The flow of production is intermittent (irregular). In other
words, the flow of production is not continuous. In this system, large varieties of products are
produced. These products are of different sizes. The design of these products goes on changing.
It keeps changing according to the design and size of the product. Therefore, this system is very
flexible.
Following chart highlights the concept of an intermittent production system.

Following are examples on the intermittent production system. Please refer above chart while
reading examples given below.
The work of a goldsmith is purely based on the frequency of his customer's orders. The
goldsmith makes goods (ornaments) on a small-scale basis as per his customer's requirements.
Here, ornaments are not done on a continuous basis.
Similarly, the work of a tailor is also based on the number of orders he gets from his customers.
The clothes are stitched for every customer independently by the tailor as per one's measurement
and size. Goods (stitched clothes) are made on a limited scale and is proportional to the number
of orders received from customers. Here, stitching is not done on a continuous basis.
The features of an intermittent production system are depicted below.
The characteristics of an intermittent production system are listed as follows:
1. The flow of production is not continuous. It is intermittent.

2. Wide varieties of products are produced.
3. The volume of production is small.
4. General purpose machines are used. These machines can be used to produce different
types of products.
5. The sequence of operation goes on changing as per the design of the product.
6. The quantity, size, shape, design, etc. of the product depends on the customer's orders.
The types of intermittent production system include:
1. Project production flows,

2. Jobbing production flows, and
3. Batch production flows.
Continuous production system
Continuous means something that operates constantly without any irregularities or frequent halts.
In the continuous production system, goods are produced constantly as per demand forecast.
Goods are produced on a large scale for stocking and selling. They are not produced on
customer's orders. Here, the inputs and outputs are standardized along with the production
process and sequence.
Following chart highlights the concept of a continuous production system.
Following are examples on the continuous production system. Please refer above chart while
reading examples given below.
The production system of a food industry is purely based on the demand forecast. Here, a large-
scale production of food takes place. It is also a continuous production.
Similarly, the production and processing system of a fuel industry is also purely based on,
demand forecast. Crude oil and other raw sources are processed continuously on a large scale to
yield usable form of fuel and compensate global energy demand.
The features of a continuous production system are depicted below.

The characteristics of a continuous production system are listed as follows:
1. The flow of production is continuous. It is not intermittent.

2. The products are standardized.
3. The products are produced on predetermined quality standards.
4. The products are produced in anticipation of demand.
5. Standardized routing sheets and schedules are prepared.
The types of continuous production system include:
1. Mass production flows, and

2. Process production flows.
Plant Layout: factors, types and methods.
➢ Plant Layout in Production Management
Plant layout refers to the physical arrangement of production facilities. It is the configuration of
departments, work centers and equipment in the conversion process. It is a floor plan of the
physical facilities, which are used in production.
Plant layout is the most effective physical arrangement, either existing or in plans of industrial
facilities i.e arrangement of machines, processing equipment and service departments to achieve
greatest co-ordination and efficiency of 4M’s (Men, Materials, Machines and Methods) in a
plant.
Layout problems are fundamental to every type of organisation/enterprise and are experienced in
all kinds of concerns/undertakings.The adequacy of layout affects the efficiency of subsequent
operations. It is an important pre-requisite for efficient operations and also has a great deal in
common with many problems. Once the site of the plant has been decided, the next important
problem before the management of the enterprise is to plan suitable layout for the plant.
According to Moore “Plant layout is a plan of an optimum arrangement of facilities including

personnel, operating equipment, storage space, material handling equipment and all other
supporting services along with the design of best structure to contain all these facilities”.
According to James Lundy, “Layout identically involves the allocation of space and the
arrangement of equipment in such a manner that overall operating costs are minimized.”
➢ Objectives of Plant Layout
The primary goal of the plant layout is to maximize the profit by arrangement of all the plant
facilities to the best advantage of total manufacturing of the product.
The objectives of plant layout are:
1. Streamline the flow of materials through the plant.

2. Facilitate the manufacturing process.
3. Maintain high turnover of in-process inventory.
4. Minimize materials handling and cost.
5. Effective utilization of men, equipment and space.
6. Make effective utilization of cubic space.
7. Flexibility of manufacturing operations and arrangements.
8. Provide for employee convenience, safety and comfort.
9. Minimize investment in equipment.
10. Minimize overall production time.
11. Maintain flexibility of arrangement and operation.
12. Facilitate the organizational structure.
Principles of Plant Layout
1. Principle of integration: A good layout is one that integrates men, materials, machines
and supporting services and others in order to get the optimum utilization of resources
and maximum effectiveness.
2. Principle of minimum distance: This principle is concerned with the minimum travel
(or movement) of man and materials. The facilities should be arranged such that, the total
distance travelled by the men and materials should be minimum and as far as possible
straight line movement should be preferred.
3. Principle of cubic space utilization: The good layout is one that utilizes both horizontal
and vertical space. It is not only enough if only the floor space is utilized optimally but
the third dimension, i.e., the height is also to be utilized effectively.
4. Principle of flow: A good layout is one that makes the materials to move in forward
direction towards the completion stage, i.e., there should not be any backtracking.
5. Principle of maximum flexibility: The good layout is one that can be altered without
much cost and time, i.e., future requirements should be taken into account while
designing the present layout.
6. Principle of safety, security and satisfaction: A good layout is one that gives due
consideration to workers safety and satisfaction and safeguards the plant and machinery
against fire, theft, etc.
7. Principle of minimum handling: A good layout is one that reduces the material
handling to the minimum.
Factors Affecting Plant Layout:
Whatever be the type of layout being contemplated the following factors are to be considered
because these factors have got significant influence on the design of the layout.
(i) Man Factor:
The man is very flexible element who can be made suitable for all sort of layouts.
Main considerations are as follows:
(i) Safety and working conditions.
(ii) Man power requirements-skill level of workers, their number required and their training
programme.
(iii) Man power utilization in the plant.
(iv) Human relations.
(ii) Material Factor:
It includes the various input materials like raw materials, semi-finished parts, and materials in
process scrap, finished products, packing materials, tools and other services.
The main considerations are:
(i) Design and specifications of the product to be manufactured.
(ii) Quantity and variety of products and materials.
(iii) Physical and chemical characteristics of various inputs materials.
(iv) Component parts or material and their sequence of operations i.e. how they go together to
generate the final product.
(iii) Machinery Factor:
The operating machinery is also one of the most important factors therefore all the information
regarding equipment and the tools are necessary for inspection, processing and maintenance etc.
(i) The processes and methods should be standardized first.
(ii) Machinery and tools selections depend upon the type of process and method, so proper
machinery and other supporting equipment should be selected on the basis of volume of
production.
(iii) Equipment utilization depends on the variation in production, requirements and operating
balance.
(iv)Machines should be used to their optimum levels of speed, feed and depth of cut.
(v) Machinery requirement is mostly based on the process/method.
(v) Maintenance of machines and replacement of parts is also important.
(iv) Movement Factor:
It mainly deals with the movement of men and materials. A good layout should ensure short
moves and should always tend towards completion of product. It also includes interdepartmental
movements and material handling equipment. This includes the flow pattern reduction of
unnecessary handling, space for movement and analysis of handling methods.
(v) Waiting Factor:
Whenever material or men is stopped, waiting occurs which costs money. Waiting cost includes
handling cost in waiting area, money tied up with idle material etc. Waiting may occur at the
receiving point, materials in process, between the operations etc.
The important considerations in this case are:
(a) Location of storage or delay points.
(b) Method of storing.
(c) Space for waiting.
(d) Safeguard equipment for storing and avoiding delay.
(vi) Service Factor:

It includes the activities and facilities for personnel such as fire protection, lighting, heating and
ventilation etc. Services for material such as quality control, production control, services for
machinery such as repair and maintenance and utilities like power, fuel/gas and water supply etc.
(vii) Building Factor:
It includes outside and inside building features, shape of building, type of building (single or
multi-storey) etc.
(viii) Flexibility Factor:
This includes consideration due to changes in material, machinery, process, man, supporting
activities and installation limitations etc. It means easy changing to new arrangements or it
includes flexibility and expendability of layouts.
Types of Plant Layout:
Production results from men, materials and machinery together with management. The
characteristics are changed. To manufacture a product layout begins with which element or
elements mentioned above move.
Keeping in view the type of industry and volume of production, the type of layout to be selected
is to be decided from the following:
1. Product or Line Layout.
2. Process or Functional Layout.
3. Fixed Position Layout.
4. Combination type of Layout.
1. Product or Line Layout:
If all the processing equipment and machines are arranged according to the sequence of
operations of a product, the layout is called product type of layout. In this type of layout, only
one product or one type of products is produced in an operating area. This product must be
standardized and produced in large quantities in order to justify the product layout.
The raw material is supplied at one end of the line and goes from one operation to the next quite
rapidly with a minimum work in process, storage and material handling. Fig. 3.3 shows product
layout for two types of products A and B.
Advantages offered by Product Layout:
(i) Lowers total material handling cost.
(ii) There is less work in process.
(iii) Better utilization of men and machines.
(iv) Less floor area is occupied by material in transit and for temporary storages.
(v) Greater simplicity of production control.
(v) Total production time is also minimized.
Limitations of Product Layout:
(i) No flexibility which is generally required is obtained in this layout.
(ii) The manufacturing cost increases with a fall in volume of production.
(iii) If one or two lines are running light, there is a considerable machine idleness.
(iv) A single machine breakdown may shut down the whole production line,
(v) Specialized and strict supervision is essential.

2. Process or Functional Layout:
The process layout is particularly useful where low volume of production is needed. If the
products are not standardized, the process layout is more desirable, because it has greater process
flexibility than other. In this type of layout the machines are not arranged according to the
sequence of operations but are arranged according to the nature or type of the operations.
This layout is commonly suitable for non-repetitive jobs. Same type of operation facilities are
grouped together such as lathes will be placed at one place all the drill machines are at another
place and so on. See Fig. 3.4 for process layout. Therefore, the process carried out in any area is
according to the machine available in that area.
Advantages of Process Layout:
(i) There will be less duplication of machines. Thus total investment in equipment purchase will
be reduced.
(ii) It offers better and more efficient supervision through specialization at various levels.
(iii) There is a greater flexibility in equipment and man power thus load distribution is easily
controlled.
(iv) Better utilization of equipment available is possible.
(v) Breakdown of equipment can be easily handled by transferring work to another machine/
work station.
(vi) There will be better control of complicated or precision processes, especially where much
inspection is required.
Limitations of Process Layout:
(i) There are long material flow lines and hence the expensive handling is required.
(ii) Total production cycle time is more owing to long distances and waiting at various points.
(iii) Since more work is in queue and waiting for further operation hence bottlenecks occur.
(iv) Generally more floor area is required.
(v) Since work does not flow through definite lines, counting and scheduling is more tedious.
(vi)Specialization creates monotony and there will be difficulty for the laid workers to find job in
other industries.
3. Fixed Position Layout:
This type of layout is the least important for today’s manufacturing industries. In this type of
layout the major component remain in a fixed location, other materials, parts, tools, machinery,
manpower and other supporting equipment are brought to this location.
The major component or body of the product remains in a fixed position because it is too heavy
or too big and as such it is economical and convenient to bring the necessary tools and
equipment’s to work place along-with the man power. This type of layout is used in the
manufacture of boilers, hydraulic and steam turbines and ships etc.
Advantages Offered by Fixed Position Layout:
(i) Material movement is reduced
(ii) Capital investment is minimized
(iii) The task is usually done by gang of operators, hence continuity of operations is ensured
(iv) Production centres are independent of each other. Hence effective planning and loading can
be made. Thus total production cost will be reduced and
(v) It offers greater flexibility and allows change in product design, product mix and production
volume.
Limitations of Fixed Position Layout:
(i) Highly skilled man power is required.
(ii) Movement of machines equipment’s to production centre may be time consuming.
(iii) Complicated fixtures may be required for positioning of jobs and tools. This may increase
the cost of production.
4. Combination Type of Layout:
Now days in pure state any one form of layouts discussed above is rarely found. Therefore
generally the layouts used in industries are the compromise of the above mentioned layouts.
Every layout has got certain advantages and limitations therefore, industries would not like to
use any type of layout as such.
Flexibility is a very important factor, so layout should be such which can be moulded according
to the requirements of industry, without much investment. If the good features of all types of
layouts are connected, a compromise solution can be obtained which will be more economical
and flexible.
Principles of Plant Layout:

According to Muther there are six basic principles of “best layout”.
These are:
(i) Principle of Overall Integration:
According to this principle the best layout is one which provides integration of production
facilities like men, machinery, raw materials, supporting activities and any other such factors
which result in the best compromise.
(ii) Principle of Minimum Distance:
According to this principle the movements of men and materials should be minimized.
(iii) Principle of Flow:
According to Muther, the best layout is one which arranges the work station for each operation
process in same order or sequence that forms treats or assembles the materials.
(iv) Principle of Cubic Space Utilization:

According to this, the best layout utilizes cubic space i.e. space available both in vertical and
horizontal directions is most economically and effectively utilized.
(v) Principle of Satisfaction and Safety:
According to this principle best layout is one which provides satisfaction and safety to all
workers concerned.
(vi) Principle of Flexibility:
In automotive and other allied industries where models of products change after sometime the
principle of flexibility provides adoption and rearrangement at a minimum cost and least
inconvenience.
Methods of Plant Layout

A layout furnishes details of the building to accommodate various facilities (like workers,
material, machinery, etc.). Inaddition, it integrates various aspects of the design of production
system. The information required for plant laying out includes, dimensions of work places,
sequenence of operations, flow pattern of materials, storage space for raw material. In-process
inventory and finished goods, offices, toilets, etc. There is no single universal technique leading
to best layout; the different techniques independently or in conjunction with other techniques
may be employed at different stages involved in plant or factory layout. The words plant and
factory can be taken more or less as synonyms.
During different development stages of a layout, the following methods may be used.
(i) Process flow charts.
They show, how different component parts assemble, in sequence of operations to form sub-
assemblies which in turn lead to assemblies (finished products).
(ii) Material Movement patterns.
The flow pattern of materials-in-process is traced and layout is built around it.
(iii) Layout Analogues.
They cover two-dimensional cutouts or templates and three dimensional models.
(a) Templates. They are used to develop plant layout. They are two-dimensional or block
templates made up of cardboard, coloured paper or celluloid. They are made to scale and are
placed on the scaled outline plan of the building. Templates or customs show the plan of the
various facilities and the building. They show the actual floor space utilization. The temples can
be placed and attached with a tape either on a board or on a cross-hatched surface or on a graph
paper and thus being known as Graphic technique. These templates have flexibility in se and can
be moved on the graph paper form place to place in order to evaluate carious feasible positions
for different machines. It is better to photograph a layout before shifting the templates to try
other layout drawings for each alternative plant layout arrangement.
A two-dimensional template gives machine outline and its details whereas block templates shows
the boundary of the maximum projected area of the machine.
(b) Three-Dimensional Models. They are scale models of a facility, and, more near to the real
situations as besides length and width they shows the height of the facility also. Models made up
of wood or deice plastic. They show minor details and can mounted on a thick plastic sheet
acting as the floor plan. Models are used mainly to develop floor plans and elevations. Models
can be made for production macines, workers, material handling equipments or any
otherfacitlity.Models are much more effective and fast as compared to drawings or templates
especially when multistory plant layout is to be designed.
(iv) The correlation chart.
It involves drawing a grid with rows presenting alternative solutions. Plant items can be ground
floor, first floor or other floors of multi-storey building.
(v) Travel chart.
A travel chart as the name suggests is chart or record of the amount of travel by the material in
process while going form machine to machine a form one department to another. The amount of
travel depends upon the frequent of movements between sections or departments travel chart
helps improving the existing plant layout.
(vi) Lord Path Matrix Method.
This method aims at reducing the transportation of in-process inventory form section to section.
Like travel chart it also helps deciding the position of one preliminary plant layout made by other
techniques. The departments having mass flow of material or goods are placed close to each
other.
Plant Location.
Plant location or the facilities location problem is an important strategic level decision making for an
organization. One of the key features of a conversion process (manufacturing system) is the efficiency
with which the products (services) are transferred to the customers. This fact will include the
determination of where to place the plant or facility.
The selection of location is a key-decision as large investment is made in building plant and machinery. It
is not advisable or not possible to change the location very often. So an improper location of plant may
lead to waste of all the investments made in building and machinery, equipment.
Before a location for a plant is selected, long range forecasts should be made anticipating future needs of
the company. The plant location should be based on the company’s expansion plan and policy,
diversification plan for the products, changing market conditions, the changing sources of raw materials
and many other factors that influence the choice of the location decision. The purpose of the location
study is to find an optimum location one that will result in the greatest advantage to the organization.
Location of an enterprise is an important entrepreneurial decision as it affects the operational as well as

financial performance. So entrepreneur is required to identify that location at which the enterprise will
have easy access to physical, economic and social endowments. The general objective in selecting a
location is to minimize total cost of production and distribution. The selected location should be in a
position to help in generating maximum revenue and provide an opportunity for further growth and
expansion. An entrepreneur is expected to evaluate his targets in terms of time and cost variable and try to
select a proper location and seek possession of the site before the zero date. Generally, financial
institutions are also interested to inspect the location or site of the plant before sanctioning any loan to the
enterprise concerned. Efforts should also be made by the entrepreneur to remove all uncertainties
associated with the site before the zero date. Entrepreneur should also know that any change in location or
site at a later date not only targets will be missed but even the viability of the project may also be lost.
Thus, ideal location site helps in smooth and efficient functioning of an enterprise. It ensures a reduction
in costs as well as improves productivity and financial viability of the enterprise.
Need for Enterprise Location
The need for location or site is generally government by the following circumstances:
(i) To promote the establishment of a new enterprise.
(ii) To undertake expansion, decentralisation and diversification necessary for meeting
(iii) To manage the situations arising due to non-renewal of existing lease of an establishment demand of
products.
(iv) To develop new location if existing location has been declared as undesirable or unsuitable.
(v) To arrange a new location by shifting from existing location due to change in market pattern,
depletion of raw materials, change in production processes and transport facilities, etc.
(vi) To open new branch or production facility at new places for increasing the volume of production and
distribution activities.
Importance of Enterprise Location
Selection of plant location or site is quite important due to the following reasons:
(i) It enables the enterprise to operate smoothly, efficiently and with the minimum cost.
(ii ) It controls wastages in efforts and talents at the entrepreneurs.
(iii) It reduces uncertainty in results.

(iv) It encourages effective mobilization of raw-materials, labour and potential customers.
(v) It develops the area by attracting other potential entrepreneurs and endowments like physical,
economic and social variables.
Steps in Enterprise Location
Following steps are important in selecting a particular location or site for the plant:
(i) Selection of the region.
(ii) Selection of the locality or community.
(iii) Selection of the exact site and
(iv) Selection of an optimum site.
Generally, entrepreneur is free to select and location or site for the plant development. However,
regulatory provisions of the government also affect the choice of plant location or site.
Location, Localisation and Planned Location of Industries
Location is concerned with a particular site where entrepreneur is interested to establish his enterprise or
plant having lowest cost objective. If a particular industry is concentrated mainly in one areas is called as
localisation of industries. For example, Kolkata and Mumbai are known for jute and textiles industry
respectively. Planned location of industries is a systematic approach by which location of industries is
planned to give each region or area or place a variety of industries to promote dispersal of industries. For
example, in Ludhiana, different types of industries have been developed and no particular industry is
concentrated in that particular area.
Factors Influencing the selection of the Location of an Enterprise or Plant or

Project
Following are the important factors which are normally to be considered when selecting the location of an
enterprise or project:
(a) Availability of Land:
Land should be large enough to meet out present requirement with provision for further expansion. Land
should be for industrial use (land usage pattern to be adhered to) and proper layout of plant and equipment
must be possible as per the technical feasibility study. Drainage level of land, soil testing report (should
be suitable for the construction of the factory) should be favourable to the project requirements.
(b) Availability of Raw Materials:

Availability of required quantity and quality of raw materials at a reasonable cost. Cost of materials
generally constitutes a major chunk of total cost of production and thus, the impact of raw materials on
location depends upon their nature and the source of their deposits.
(c) Supply of Manpower:
Every enterprise requires an adequate supply of manpower with appropriate skills. Availability of skilled
manpower, cost of labour, labour expectations, local culture affect the supply of manpower to the
enterprise. Sometimes, it becomes difficult to obtain high skilled people to work at very remote places
with big town facilities. Alfred Weber rightly remarked that that “an industrial site will deviate from the
point of minimum transportation cost to the cheaper labour centre if the additional cost of transportation
at the new centre is more than compensated by the savings in labour cost.” However, this situation has
been changed. Labour is mobile and there is a level of minimum wages fixed by the Government from
time to time. Moreover certain industries are capital intensive and they require less labour.
(d) Transport and Communication Facilities:
Transport services are required for assembling of materials and distribution of products. At the time of
selection of a particular efforts should be made to ensure that transportation facilities are easily available
at reasonable rates. Site should be well connected by road and rail or nearer to national highways, major
railway yard etc., Transportation of equipment, material, product and personnel is an important
requirement and it should be ensured in time and in efficient manner.
(e) Proximity to the Market:
Availability of consumer market also affects the viability of the enterprise. An entrepreneur can improve
his customer relations if they are available in nearby areas and easily render rapid services to them.
Enterprises engaged in the production of perishable commodities and those producing for a local market
are also interested to develop their plants in potential consumer’s area as it would ensure a reduction in
transportation cost involved in distributing the finished products. Actually, an enterprise tends to disperse
only if they find a new consumer market.
(f) Water, Power and Fuel:
Uninterrupted operations of an enterprise is the result of sufficient supply of water, power and fuel etc. In
this context, efforts are required to assess local sources of water. Besides, required water supply to be
assessed in terms of water conditions or sub-soil water etc. Availability of power in the region is to be
evaluated in terms of actual requirements. Some industries consume lot power (aluminium) or water
(Paper industry) and these variables are a very important factor for them. Nowadays, industries are facing
the problem of power shortages and they are shifting to the fuel option––coal. For example, coal is the
major source of fuel for the iron and steel industry and these industries are located near the coal mines.
(g) Regional Development:
In our country, government is pursuing the policy of balanced regional development to solve the
problems like slum, disparity of income and wealth and optimum use of resources. In order to ensure
balanced regional development, government has declared certain areas as backward areas and zero
industry areas. Government gives certain benefits like tax benefits but it is necessary to evaluate the
process to what extent they would outweigh the disadvantages.
(h) External Economies:
In some cases, an enterprise prefers to be located in those centres where other industrial units are already
located. There are certain facilities like transportation, warehousing, banking, insurance, communication
and factoring services etc. which are easily available and industrial units tend to be concentrated in these
areas. Besides, raw materials are also available at cheaper prices and in large quantity. For example, by
product of one enterprise may be used as raw material by another enterprise. Enterprises working as
distilleries are generally located in nearby areas of Sugar mills because they supply molasses as raw
materials to distilleries.
(i) Personal Factors:
Personal preferences and prejudices of an entrepreneur also effect the selection of location.
Entrepreneurial preferences are also affected by law and order, political stability and safety etc. Thus,
entrepreneurs prefer to locate their enterprises in those areas which are safe and free from law and order
problems.
(j) Local Laws and Regulations:
In certain cases local laws and regulations impose restrictions on the development of industrial units in
special areas. For example, consent of various agencies like local Panchayat, municipality, government,
state planning bodies is mandatory for the entrepreneurs otherwise they cannot run their enterprises in
municipal or local areas. Similarly, high rate of income-tax, sale-tax, octroi, etc. discourage entrepreneur
to develop their plant in a particular area or state. But facility of tax holidays encourages them otherwise
to develop their units in a particular area or state.
(k) Ecological and Environmental Factors:
Certain industrial units are required to be governed by the ecological and environmental provisions of
Pollution Control Act. Industrial units are required to follow the norms of Pollution Control Board. They
have to make efforts for the disposal of effluents are directed by the pollution control authorities. They
have to arrange the nearest source where effluent (after treatment) could be discharged.
Government Locational Policy
Industrial location has received closer attention of the government and policy planners in recent times.
Actually, location policy is an extension of the policy of development backward areas and industrial
disposal. It deals with negative aspect and positive thrust. The negative aspect is concerned with
preventive measures for developing new units in the already advanced areas and urban, metropolitan
centres with the dictates of then government from time to time. But positive thrust deals with instruments
like concessional finance, investment tax incentives subsidies etc. which are being used by the
government to develop new units in backward and zero industries districts of different states. With the
help of positive strategy, government is trying to ensure effective dispersal of industrial units to backward
areas. The government has already formulated a policy that “The new unit should not be located within
the standard urban area limit of a large metropolitan city having a population of more than prescribed
limit determined by government.
The location of industrial units is further regulated by the local zoning and land-use regulations as also the
environmental regulations. Hence, even if the requirement of the locational policy as stated above is
fulfilled, but the local zoning and land-use regulations of a State government, or the regulations of the
Ministry of Environment do not permit setting up of an industry at a location, then the entrepreneur would
be required to abide by that decision.
Thus, selection of location of an enterprise is an important decision and entrepreneur should try to assess
the implication of the above factors. These factors affect the survival and viability of the enterprise in the
long run.
One study of locational considerations from small-scale units revealed that the native place or homelands
(personal factor) of the entrepreneur was the most important factor. Heavy preference to homeland
suggests that small-scale enterprise is not freely mobile. Low preference for Government incentives
suggests that concessions and incentives cannot compensate for poor infrastructure.
Unit – III:
Aggregate Planning Capacity Planning, Material Requirement Planning, Just in Time
Manufacturing (JIT).
Aggregate Planning :
Aggregate planning is an intermediate term planning decision. It is the process of planning the quantity
and timing of output over the intermediate time horizon (3 months to one year). Within this range, the
physical facilities are assumed to –10 be fixed for the planning period. Therefore, fluctuations in demand
must be met by varying labor and inventory schedule. Aggregate planning seeks the best combination to
minimize costs.
An organization can finalize its business plans on the recommendation of demand forecast. Once business
plans are ready, an organization can do backward working from the final sales unit to raw materials
required. Thus annual and quarterly plans are broken down into labor, raw material, working capital, etc.
requirements over a medium-range period (6 months to 18 months). This process of working out
production requirements for a medium range is called aggregate planning.
Aggregate production planning, abbreviated as APP, is useful for operation management. It is associated
with the determination of production, inventory, and personnel levels to fulfil varying demand over a
planning perspective that ranges from a period of six months to one year. Aggregate production plans are
needed to exploit workforce opportunity and represent a crucial part of operations management.
Aggregate production plans facilitate matching of supply and demand while reducing costs. Process of
Aggregate production planning applies the upper-level predictions to lower-level, production-floor
scheduling and is most successful when applied to periods 2 to 18 months in the future. Plans generally
either "chase" demand, adjusting workforce accordingly, or are "level" plans, meaning that labour is
comparatively constant with fluctuations in demand being met by inventories and back orders.
Concept of aggregate production planning denotes to the process of determine the overall quantities of
products to be manufactured or produced in a plant or other manufacturing facility during a medium term
planning period such as a month, or a quarter. The aggregate plan output comprises of the total quantities
of each product or a group of product to be manufactured in the plan period of going into details of
scheduling of different manufacturing activities required to attain the planned production levels. The
aggregate production will also not specify details such as the dates when material ordered against
individual customer order will be ready for delivery. The aggregate production plan is designed to
establish overall production targets and as input for planning availability of other inputs and supporting
activities to meet the production targets. The aggregate plans then form the basis of more comprehensive
production such as daily and weekly production schedules and customer delivery schedules.
❖ Costs relevant to aggregate production planning:
1. Basic production costs: material costs, direct labour costs, and overhead costs. It is customary to
divide these costs into variable and fixed costs.
2. Costs associated with changes in the production rate: Costs involved in hiring, training, and
laying off personnel, as well as overtime compensations.
3. Inventory related costs. Aggregate production planning models may be supportive as decision
support systems and to appraise proposals in union negotiations.
Techniques of Aggregate Planning

Various techniques are used to perform the task of aggregate planning. Usually, there are two categories:
Informal trial-and-error techniques and mathematical techniques. In practice, informal techniques are
more commonly used. However, a substantial amount of research has been done to mathematical
techniques, but still, they are not as extensively used, they often serve as a basis for comparing the
effectiveness of alternative techniques for aggregate planning.
There are several steps in general procedure for aggregate planning:
1. Determine demand for each period.

2. Determine capacities (regular time, overtime, subcontracting) for each period.
3. Identify company or departmental policies that are pertinent (e.g., maintain a safety stock of 5
percent of demand, maintain a reasonably stable workforce).
4. Determine unit costs for regular time, overtime, subcontracting, holding inventories, back orders,
layoffs, and other relevant costs.
5. Develop alternative plans and compute the cost for each activity.
6. If satisfactory plans emerge, select the one that best satisfies objectives. Otherwise, return to step
5.
Procedure for Aggregate Planning
❖ Steps for Developing the Aggregate Production Plan.
It can be useful to employ a worksheet or spreadsheet to summarize demand, capacity, and cost
for each plan. Additionally, graphs can be used to guide development of alternatives. Among all
methods, the spreadsheet solver approach is the most appropriate for industries because the
solver on spreadsheet software is readily available on virtually all personal computers, the APP
model is comparatively easy to devise in a spreadsheet format, and lastly, the results are easy to
construe. There are certain guidelines for developing optimal aggregate production plan using
spreadsheet solver.
➢ First of all, necessary data must be collected for developing Aggregate production
planning mode.
➢ Secondly, formulate APP model in the spreadsheet format.
➢ Next step is to appraise the obtained solutions. This can be done by presenting the
constructed spreadsheet aggregate production planning model and its solutions to related
departments of the company such as production, personnel, planning, sales and
marketing, and warehousing, and judge whether the solutions are satisfactory. The
comparison between the existing aggregate production plan and the optimal plan
generated from the Aggregate production planning model may be done in financial term.
If the solution is not satisfactory, values of some input parameters may need to be
reconsidered or the constraints may need to be customized. The spreadsheet APP model
will be changed until the solutions are acceptable.
➢ Last step is to implement the aggregate production plan.
After the spreadsheet APP model is agreeably developed and solved, the obtained solutions can
be implemented. During the execution of the aggregate production plan, some parameters of the
model may be altered such as demands, productivity rates, related costs, number of workers, and
inventory levels. These parameters should be modernized regularly and the APP model is solved
to resolve the revised aggregate production plan.
❖ Factors Affecting Aggregate Planning

Aggregate planning is an operational activity critical to the organization as it looks to balance long-term
strategic planning with short term production success. Following factors are critical before an aggregate
planning process can actually start;
• A complete information is required about available production facility and raw materials.
• A solid demand forecast covering the medium-range period
• Financial planning surrounding the production cost which includes raw material, labor, inventory
planning, etc.
• Organization policy around labor management, quality management, etc.
For aggregate planning to be a success, following inputs are required;
• An aggregate demand forecast for the relevant period

• Evaluation of all the available means to manage capacity planning like sub-contracting,
outsourcing, etc.
• Existing operational status of workforce (number, skill set, etc.), inventory level and production
efficiency.
Aggregate planning will ensure that organization can plan for workforce level, inventory level and
production rate in line with its strategic goal and objective.
❖ Aggregate planning as an Operational Tool
Aggregate planning helps achieve balance between operation goal, financial goal and overall strategic
objective of the organization. It serves as a platform to manage capacity and demand planning.In a
scenario where demand is not matching the capacity, an organization can try to balance both by pricing,
promotion, order management and new demand creation.
In scenario where capacity is not matching demand, an organization can try to balance the both by
various alternatives such as.
• Laying off/hiring excess/inadequate excess/inadequate excess/inadequate workforce until demand

decrease/increase.
• Including overtime as part of scheduling there by creating additional capacity.
• Hiring a temporary workforce for a fix period or outsourcing activity to a sub-contrator.
Importance of Aggregate Planning
Aggregate planning plays an important part in achieving long-term objectives of the organization.
Aggregate planning helps in:
• Achieving financial goals by reducing overall variable cost and improving the bottom line
• Maximum utilization of the available production facility
• Provide customer delight by matching demand and reducing wait time for customers
• Reduce investment in inventory stocking
• Able to meet scheduling goals there by creating a happy and satisfied work force.
❖ Aggregate Planning Strategies
There are three types of aggregate planning strategies available for organization to choose from. They are
as follows.
Level Strategy
As the name suggests, level strategy looks to maintain a steady production rate and workforce level. In
this strategy, organization requires a robust forecast demand as to increase or decrease production in
anticipation of lower or higher customer demand. Advantage of level strategy is steady workforce.
Disadvantage of level strategy is high inventory and increase back logs.
Chase Strategy
As the name suggests, chase strategy looks to dynamically match demand with production. Advantage of
chase strategy is lower inventory levels and back logs. Disadvantage is lower productivity, quality and
depressed work force.
Hybrid Strategy
As the name suggests, hybrid strategy looks to balance between level strategy and chase strategy.
Capacity Planning :
The production system design planning considers input requirements, conversion process and output.
After considering the forecast and long-term planning organization should undertake capacity planning.
Capacity is defined as the ability to achieve, store or produce. For an organization, capacity would be the
ability of a given system to produce output within the specific time period. In operations, management
capacity is referred as an amount of the input resources available to produce relative output over period of
time.
In general, terms capacity is referred as maximum production capacity, which can be attained within a
normal working schedule. Capacity planning is essential to be determining optimum utilization of
resource and plays an important role decision-making process, for example, extension of existing
operations, modification to product lines, starting new products, etc.
Capacity planning is to be carried out keeping in mind future growth and expansion plans, market trends,
sales forecasting, etc. It is a simple task to plan the capacity in case of stable demand. But in practice the
demand will be seldom stable. The fluctuation of demand creates problems regarding the procurement of
resources to meet the customer demand. Capacity decisions are strategic in nature. Capacity is the rate of
productive capability of a facility. Capacity is usually expressed as volume of output per period of time.
Production managers are more concerned about the capacity for the following reasons:
• Sufficient capacity is required to meet the customers demand in time.

• Sufficient capacity is required to meet the customers demand in time.
• Capacity affects the cost efficiency of operations.
• Capacity affects the scheduling system.
• Capacity creation requires an investment.
Capacity Planning Classification
Capacity planning based on the timeline is classified into three main categories long range, medium range
and short range.
1. Long Term Capacity:
Long range capacity of an organization is dependent on various other capacities like design capacity,
production capacity, sustainable capacity and effective capacity. Design capacity is the maximum output
possible as indicated by equipment manufacturer under ideal working condition. Production capacity is
the maximum output possible from equipment under normal working condition or day.
Sustainable capacity is the maximum production level achievable in realistic work condition and
considering normal machine breakdown, maintenance, etc. Effective capacity is the optimum production
level under pre-defined job and work-schedules, normal machine breakdown, maintenance, etc.
2. Medium Term Capacity:
The strategic capacity planning undertaken by organization for 2 to 3 years of a time frame is referred to
as medium term capacity planning.
3. Short Term Capacity:
he strategic planning undertaken by organization for a daily weekly or quarterly time frame is referred to
as short term capacity planning.
Capacity Measurement in Operations Management
Measurement of Capacity Planning
The capacity of the manufacturing unit can be expressed in number of units of output per period. In some
situations measuring capacity is more complicated when they manufacture multiple products. In such
situations, the capacity is expressed as man-hours or machine hours. The relationship between capacity
and output.
1. Design capacity:
Designed capacity of a facility is the planned or engineered rate of output of goods or services under
normal or full scale operating conditions. For example, the designed capacity of the cement plant is 100
TPD (Tonnes per day). Capacity of the sugar factory is 150 tonnes of sugarcane crushing per day.
2. System capacity:
System capacity is the maximum output of the specific product or product mix the system of workers and
machines is capable of producing as an integrated whole. System capacity is less than design capacity or
at the most equal, because of the limitation of product mix, quality specification, breakdowns. The actual
is even less because of many factors affecting the output such as actual demand, downtime due to
machine/equipment failure, unauthorized absenteeism.
The system capacity is less than design capacity because of long range uncontrollable factors. The actual
output is still reduced because of short-term effects such as, breakdown of equipment, inefficiency of
labor. The system efficiency is expressed as ratio of actual measured output to the system capacity.
System Efficiency (SE) =Actual output - System capacity
3. Licensed capacity:
Capacity licensed by the various regulatory agencies or government authorities. This is the limitation on
the output exercised by the government.
4. Installed capacity:
The capacity provided at the time of installation of the plant is called installed capacity.
5. Rated capacity:
Capacity based on the highest production rate established by actual trials is referred to as rated capacity.
Material Requirement Planning :

MRP refers to the basic calculations used to determine components required from end item
requirements. It also refers to a broader information system that uses the dependence relationship
to plan and control manufacturing operations.
“Materials Requirement Planning (MRP) is a technique for determining the quantity and timing
for the acquisition of dependent demand items needed to satisfy master production schedule
requirements.”
In manufacturing, developing a plan for your resources is vital to your operation. Without
resource planning, your operation will have a much more challenging time managing various
areas within your supply chain such as inventory, production, and output. This is why utilizing a
materials requirement planning (MRP) system can efficiently manage materials within
production, making
Through materials requirement planning (MRP), the need for manual materials planning is
eliminated and the system is able to successfully carry out an efficient strategy. MRP has become
a vital component in allowing manufacturers to keep up with a consistently growing demand.
Utilizing a systemic approach, the system is able to efficiently keep production up to schedule
through data analysis and simple integration. Although the system can not run a production
facility all on it’s own, it still is able to maintain a steady flow of materials throughout the supply
chain through decision-making capabilities.
Various functions of an MRP system include the following:
1. Inventory Management - Arguably the main objective of an MRP system, the feature is
to ensure that materials are available at a moments notice. This eliminates the need for
manual-entered data and is able to carry out material orders with ease. It also is able to
alert the facility when products are ready to be delivered.
2. Cost Reduction - In correlation with inventory management, cost is reduced
significantly. Through ensuring a steady flow of inventory, holding and untimely-
delivery cost are reduced, ultimately bringing more revenue into the operation.
3. Production Optimization - Although the main goal of MRP is to oversee and manage
materials, it benefits the rest of the system as well. As materials are flowing throughout
the supply chain, equipment and employees are able to work at a much faster and
efficient rate as well.
Implementing an MRP system can be extremely beneficial to your production facility, but as
mentioned previously, the system is not enough by itself. As manufacturers are looking for ways
to enhance production, many are coming to the same solution - advanced planning and
scheduling software (APS)
Objectives of Material Requirement Planning
1. Inventory reduction:
MRP determines how many components are required when they are required in order to meet the
master schedule. It helps to procure the materials/ components as and when needed and thus
avoid excessive build up of inventory.
2. Reduction in the manufacturing and delivery lead times:
MRP identifies materials and component quantities, timings when they are needed, availabilities
and procurements and actions required to meet delivery deadlines. MRP helps to avoid delays in
production and priorities production activities by putting due dates on customer job order.
3. Realistic delivery commitments:
By using MRP, production can give marketing timely information about likely delivery times to
prospective customers.
4. Increased efficiency:
MRP provides a close coordination among various work centers and hence help to achieve
uninterrupted flow of materials through the production line. This increases the efficiency of
production system.
Just in Time Manufacturing (JIT).

Just-In-Time (JIT) Manufacturing is a philosophy rather than a technique. By eliminating all waste and
seeking continuous improvement, it aims at creating manufacturing system that is response to the market
needs.
The phase just in time is used to because this system operates with low WIP (Work-In-Process) inventory
and often with very low finished goods inventory. Products are assembled just before they are sold,
subassemblies are made just before they are assembled and components are made and fabricated just
before subassemblies are made. This leads to lower WIP and reduced lead times. To achieve this
organizations have to be excellent in other areas e.g. quality.
According to Voss, JIT is viewed as a “Production methodology which aims to improve overall
productivity through elimination of waste and which leads to improved quality”.
Jit in Production and Operation Management
JIT provides an efficient production in an organization and delivery of only the necessary parts in the
right quantity, at the right time and place while using the minimum facilities”.
Seven Wastes
Shiego Shingo, a Japanese JIT authority and engineer at the Toyota Motor Company identifies seven
wastes as being the targets of continuous improvement in production process. By attending to these
wastes, the improvement is achieved. Establishes layouts and locations to make handling and transport
unnecessary if possible. Minimize transportation and handling if not possible to eliminate.
1. Waste of over production eliminate by reducing set-up times, synchronizing quantities and timing
between processes, layout problems. Make only what is needed now.
2. Waste of waiting eliminate bottlenecks and balance uneven loads by flexible work force and
equipment.
3. Waste of transportation establishes layouts and locations to make handling and transport
unnecessary if possible. Minimize transportation and handling if not possible to eliminate.
4. Waste of processing itself question regarding the reasons for existence of the product and then
why each process is necessary.
5. Waste of stocks reducing all other wastes reduces stocks.
6. Waste of motion study for economy and consistency. Economy improves productivity and
consistency improves quality. First improve the motions, then mechanize or automate otherwise.
There is danger of automating the waste.
7. Waste of making defective products develop the production process to prevent defects from being
produced, so as to eliminate inspection. At each process, do not accept defects and makes no
defects. Make the process fail-safe. A quantify process always yield quality product.
Benefits of JIT
The most significant benefit is to improve the responsiveness of the firm to the changes in the market
place thus providing an advantage in competition. Following are the benefits of JIT:
1. Product cost—is greatly reduced due to reduction of manufacturing cycle time, reduction of waste
and inventories and elimination of non-value added operation.
2. Quality —is improved because of continuous quality improvement programs.
3. Design—Due to fast response to engineering change, alternative designs can be quickly brought
on the shop floor.
4. Productivity improvement.
5. Higher production system flexibility.
6. Administrative and ease and simplicity.
Unit – IV:
Quality Control: concepts and functions of Inspection and Quality Control Department,
Statistical Quality Control, acceptance Sampling, Control charts, Total quality management
(TQM): concepts and characteristics.
Introduction of quality
In any business organization, profit is the ultimate goal. To achieve this, there are several approaches.
Profit may be maximized by cutting costs for the same selling price per unit. If it is a monopolistic
business, without giving much of importance to the cost reduction programs, the price may be fixed
suitably to earn sufficient profit. But, to survive in a competitive business environment, goods and
services produced by a firm should have the minimum required quality. Extra quality means extra cost.
So, the level of quality should be decided in relation to other factors such that the product is well absorbed
in the market. In all these cases, to have repeated sales and thereby increased sales revenue, basic quality
is considered to be one of the supportive factors.
Quality is a measure of how closely a good or service conforms to specified standard. Quality standards
may be any one or a combination of attributes and variables of the product being manufactured. The
attributes will include performance, reliability, appearance, commitment to delivery time, etc., variables
may be some measurement variables like, length, width, height, diameter, surface finish, etc.
Most of the above characteristics are related to products. Similarly, some of the quality characteristics of
services are meeting promised due dates, safety, comfort, security, less waiting time and so forth. So, the
various dimensions of quality are performance, features, reliability, conformance, durability,
serviceability, aesthetics, perceived quality, safety, comfort, security, commitment to due dates, less
waiting time, etc.
The process through which the standards are established and met with standards is called control. This
process consists of observing our activity performance, comparing the performance with some standard
and then taking action if the observed performance is significantly too different from the standards.
control
The control process involves a universal sequence of steps as follows:
• Choose the control object

• Choose a unit of measure
• Set the standard value
• Choose a sensing device which can measure
• Measure actual performance
• Interpret the difference between actual and standard
• Taking action.
Need for Controlling Quality
In the absence of quality, the following will result:
• No yardstick for comparing the quality of goods/services.

• Difficulty in maintaining consistency in quality.
• Dissatisfied customers due to increased maintenance and operating costs of products/services.
• Increased rework cost while manufacturing products/providing services.
• Reduced life time of the products/services.
• Reduced flexibility with respect to usage of standard spare parts.
• Hence, controlling quality is an essential activity.
Quality Control:
Quality Control (QC) may be defined as a system that is used to maintain a desired level of
quality in a product or service. It is a systematic control of various factors that affect the quality
of the product. It depends on materials, tools, machines, type of labor, working conditions etc.
QC is a broad term, it involves inspection at particular stage but mere inspection does not mean
QC. As opposed to inspection, in quality control activity emphasis is placed on the quality future
production. Quality control aims at prevention of defects at the source, relies on effective
feedback system and corrective action procedure. Quality control uses inspection as a valuable
tool.
According to Juran “Quality control is the regulatory process through which we measure actual
quality performance, compare it with standards, and act on the difference”.
Alford and Beatty define QC as “In the broad sense, quality control is the mechanism by which
products are made to measure up to specifications determined from customers, demands and
transformed into sales engineering and manufacturing requirements, it is concerned with making
things right rather than discovering and rejecting those made wrong”.
• Types of Quality Control
QC is not a function of any single department or a person. It is the primary responsibility of any
supervisor to turn out work of acceptable quality. Quality control can be divided into three main
sub-areas, those are:
1. Off-line quality control,

2. Statistical process control and
3. Acceptance sampling plans.
1. Off-line quality control:
Its procedure deal with measures to select and choose controllable product and process
parameters in such a way that the deviation between the product or process output and the
standard will be minimized. Much of this task is accomplished through product and process
design.
Example:
Taguchi method, principles of experimental design etc.
2. Statistical process control:
SPC involves comparing the output of a process or a service with a standard and taking remedial
actions in case of a discrepancy between the two. It also involves determining whether a process
can produce a product that meets desired specification or requirements. On-line SPC means that
information is gathered about the product, process, or service while it is functional. The
corrective action is taken in that operational phase. This is real-time basis.
3. Acceptance sampling plans:
A plan that determines the number of items to sample and the acceptance criteria of the lot, based
on meeting certain stipulated conditions (such as the risk of rejecting a good lot or accepting a
bad lot) is known as an acceptance sampling plan.
• Steps in Quality Control
Following are the steps in quality control process:
1. Formulate quality policy.

2. Set the standards or specifications on the basis of customer’s preference, cost and profit.
3. Select inspection plan and set up procedure for checking.
4. Detect deviations from set standards of specifications.
5. Take corrective actions or necessary changes to achieve standards.
6. Decide on salvage method i.e., to decide how the defective parts are disposed of, entire
scrap or rework.
7. Coordination of quality problems.
8. Developing quality consciousness both within and outside the organization.
9. Developing procedures for good vendor-vendee relations.
• Objectives of Quality Control
Following are the objectives of quality control:
1. To improve the companies income by making the production more acceptable to the
customers, i.e., by providing long life, greater usefulness, maintainability etc.
2. To reduce companies cost through reduction of losses due to defects.
3. To achieve interchangeability of manufacture in large scale production.
4. To produce optimal quality at reduced price.
5. To ensure satisfaction of customers with productions or services or high quality level, to
build customer goodwill, confidence and reputation of manufacturer.
6. To make inspection prompt to ensure quality control.
7. To check the variation during manufacturing.
The broad areas of application of quality control are incoming material control, process control
and product control.
• Benefits of Quality Control
1. Improving the quality of products and services.

2. Increasing the productivity of manufacturing processes, commercial business, and
corporations.
3. Reducing manufacturing and corporate costs.
4. Determining and improving the marketability of products and services.
5. Reducing consumer prices of products and services.
6. Improving and/or assuring on time deliveries and availability.
7. Assisting in the management of an enterprise.
• Seven Tools for Quality Control
To make rational decisions using data obtained on the product, or process, or from the consumer,
organizations use certain graphical tools. These methods help us learn about the characteristics of
a process, its operating state of affairs and the kind of output we may expect from it. Graphical
methods are easy to understand and provide comprehensive information; they are a viable tool
for the analysis of product and process data. These tools are effect on quality improvement. The
seven quality control tools are:
1. Pareto charts
2. Check sheets
3. Cause and effect diagram
4. Scatter diagrams
5. Histogram
6. Graphs or flow charts

7. Control charts
PARETO CHARTS
Pareto charts help prioritize by arranging them in decreasing order of importance. In an

environment of limited resources these diagrams help companies to decide on the order in which
they should address problems. The Pareto analysis can be used to identify the problem in a
number of forms.
a) Analysis of losses by material (number or past number).

b) Analysis of losses by process i.e., classification of defects or lot rejections in terms of the
process.
c) Analysis of losses by product family.
d) Analysis by supplier across the entire spectrum of purchases.
e) Analysis by cost of the parts.
f) Analysis by failure mode.
Example:
A Pareto chart of reasons for poor quality. Poor design will be the major reason, as indicated by
64%. Thus, this is the problem that the manufacturing unit should address first.
• Poor Design
• Defective Parts
• Operator Error
• Wrong Dimensions
• Surface Abrasion
• Machine Calibrations
• Defective Material
CHECK SHEETS
Check sheets facilitate systematic record keeping or data collection observations are recorded as
they happen which reveals patterns or trends. Data collection through the use of a checklist is
often the first step in analysis of quality problem. A checklist is a form used to record the
frequency of occurrence of certain product or service characteristics related to quality. The
characteristics may be measurable on a continuous scale such as weight, diameter, time or
length.
CAUSE AND EFFECT DIAGRAM
It is sometimes called as Fish-bone diagram. It is first developed by Kaorv Ishikawa in 1943 and
is sometimes called as Ishikawa diagram. The diameter helps the management trace customer
complaints directly to the operations involved. The main quality problem is referred to Fish-
head; the major categories of potential cause structural bones and the likely specific causes to
ribs. It explores possible causes of problems, with the intention being to discover the root causes.
This diagram helps identify possible reasons for a process to go out of control as well as possible
effects on the process.
Fishbone diagram
SCATTER DIAGRAM (SCATTERPLOTS)
It often indicates the relationship between two variables. They are often used as follow-ups
to a cause and effect analysis to determine whether a stated cause truly does impact the
quality characteristics.
Example:
The plots advertising expenditure against company sales and indicates a strong positive
relationship between the two variables. As the level of advertising expenditure increases
sales tend to increase.
HISTOGRAM (OR) BAR CHARTS
It displays the large amounts of data that are difficult to interpret in their raw form. A
histogram summarizes data measured on a continuous scale showing the frequency
distribution of some quality characteristics (in statistical terms the central tendency and the
dispersion of the data).
Histogram
Often the mean of the data is indicated on the histogram. A bar chart is a series of bare
representing the frequency of occurrence of data characteristics, the bar height indicates the
number of times a particular quality characteristic was observed.
FLOW CHARTS (OR) GRAPHS
It shows the sequence of events in a process. They are used for manufacturing and service
operations. Flow charts are often used to diagram operational procedures to simplify the system.
They can identify bottlenecks, redundant steps and non-value added activities. A realistic flow
chart can be constructed by using the knowledge of the person who are directly involved in the
particular process. The flow chart can be identifies where delays can occur.
Flowchart
CONTROL CHARTS
It distinguishes special causes of variations from common causes of variation. They are used to
monitor and control process on an ongoing basis. A typical control chart plots a selected quality
characteristic found from sub-group of observations as a function of sample number.
Characteristics such as sample average, sample range and sample proportion of non-conforming
units are plotted. The centre line on a control chart represents the average value of characteristics
being plotted. Two limits know as the upper control limit (UCL) and lower control limit (LCL)
are also shown on control charts. These limits are constructed so that if the process is operating
under a stable system of chance causes, the problem of an observation falling outside these limits
is quite small. The following figure shows a generalized representation of a control chart.
Control chart shows the performance of a process from two points of view. First, they show a
snapshot of the process at the moment the data are collected.
Second, they show the process trend as time progresses. Process trends are important because
they help in identifying the out-of-control status if it actually exists. Also, they help to detect
variations outside the normal operational limits, and to identify the cause of variations. Fig.
shows a generalized representation of a control chart.
Control charts
Causes of Variation in Quality
The variation in the quality of product in any manufacturing process is broadly classified as:
1. Chance causes
2. Assignable causes.
CHANCE CAUSES
The chance causes are those causes which are inherit in manufacturing process by virtue of
operational and constructional features of the equipments involved in a manufacturing process.
This is because of
• Machine vibrations
• Voltage variations
• Composition variation of material, etc.
They are difficult to trace and difficult to control, even under best condition of production. Even
though, it is possible to trace out, it is not economical to eliminate. The chance causes results in
only a minute amount of variation in process. Variation in chance causes is due to internal
factors only the general pattern of variation under chance causes will follow a stable statistical
distribution (normal distribution). Variation within the control limits means only random causes
are present.
ASSIGNABLE CAUSES
These are the causes which creates ordinary variation in the production quality. Assignable
cause’s variation can always be traced to a specific quality. They occur due to
• Lack of skill in operation

• Wrong maintenance practice
• New vendors
• Error in setting jigs and fixtures
• Raw material defects
Variation due to these causes can be controlled before the defective items are produced. Any one
assignable cause can result in a large amount of variation in process. If the assignable causes are
present, the system will not follow a stable statistical distribution. When the actual variation
exceeds the control limits, it is a signal that assignable causes extend the process and process
should be investigated.
Inspection and Quality control in Production Management

Inspection is an important tool to achieve quality concept. It is necessary to assure confidence to
manufacturer and aims satisfaction to customer. Inspection is an indispensable tool of modern
manufacturing process. It helps to control quality, reduces manufacturing costs, eliminate scrap
losses and assignable causes of defective work.
The inspection and test unit is responsible for appraising the quality of incoming raw materials
and components as well as the quality of the manufactured product or service. It checks the
components at various stages with reference to certain predetermined factors and detecting and
sorting out the faulty or defective items. It also specified the types of inspection devices to use
and the procedures to follow to measure the quality characteristics.
Inspection only measures the degree of conformance to a standard in the case of variables. In the
case of attributes inspection merely separates the nonconforming from the conforming.
Inspection does not show why the nonconforming units are being produced.
Inspection is the most common method of attaining standardization, uniformity and quality of
workmanship. It is the cost art of controlling the production quality after comparison with the
established standards and specifications. It is the function of quality control. If the said item does
not fall within the zone of acceptability it will be rejected and corrective measure will be applied
to see that the items in future conform to specified standards.
Objectives of Inspection in Production Management
Objectives of Inspection
1. To detect and remove the faulty raw materials before it undergoes production.
2. To detect the faulty products in production whenever it is detected.
3. To bring facts to the notice of managers before they become serous to enable them
discover weaknesses and over the problem.
4. To prevent the substandard reaching the customer and reducing complaints.
5. To promote reputation for quality and reliability of product.
Purpose of Inspection
1. To distinguish good lots from bad lots.

2. To distinguish good pieces from bad pieces.
3. To determine if the process is changing.
4. To determine if the process is approaching the specification limits.
5. To rate quality of product.
6. To rate accuracy of inspectors.
7. To measure the precision of the measuring instrument.
8. To secure products-design information.
9. To measure process capability.
Types of Inspection in Production Management
Types of inspection are:

1. Floor inspection
2. Centralized inspection
3. Combined inspection
4. Functional inspection
5. First piece inspection
6. Pilot piece inspection
7. Final inspection
FLOOR INSPECTION
In this system, the inspection is performed at the place of production. It suggests the checking of
materials in process at the machine or in the production time by patrolling inspectors. These
inspectors move from machine to machine and from one to the other work centers. Inspectors
have to be highly skilled. This method of inspection minimize the material handling, does not
disrupt the line layout of machinery and quickly locate the defect and readily offers field and
correction.
Advantages
• Detection of errors of the source reduces scrap and rework.

• Correction is done before it affects further production, resulting in saving cost of
unnecessary work on defective parts.
• Material handling time is reduced.
• Job satisfaction to worker as he can’t be held responsible for bad work at a later date.
• Greater number of pieces can be checked than a sample size.
• Does not delay in production.
Disadvantages
• Delicate instruments can be employed.

• Measuring or inspection equipment have to be recalibrated often as they are subjected to
wear or dust.
• High cost of inspection because of numerous sets of inspections and skilled inspectors.
• Supervision of inspectors is difficult due to vibration.
• Pressure on inspector.
• Possibility of biased inspection because of worker.
Suitability
• Heavy products are produced.
• Different work centers are integrated in continuous line layout.
CENTRALISED INSPECTION
Inspection is carried in a central place with all testing equipment; sensitive equipment is housed
in air-conditioned area. Samples are brought to the inspection floor for checking. Centralized
inspection may locate in one or more places in the manufacturing industry.
Advantages
• Greater degree of inspection due to sensitive equipment.

• Less number of inspectors and tools.
• Equipment needs less frequency of recalibration.
• Cost of inspection is reduced.
• Unbiased inspection.
• Supervision of inspectors made possible.
• No distraction to the inspector.
Disadvantages
• Defects of job are not revealed quickly for prevention.

• Greater material handling.
• High cost as products are subjected to production before they are prevented.
• Greater delay in production.
• Inspection of heavy work not possible.
• Production control work is more complicated.
• Greater scrap.
COMBINED INSPECTION
Combination of two methods whatever may be the method of inspection, whether floor or
central. The main objective is to locate and prevent defect which may not repeat itself in
subsequent operation to see whether any corrective measure is required and finally to maintain
quality economically.
FUNCTIONAL INSPECTION
This system only checks for the main function, the product is expected to perform. Thus an
electrical motor can be checked for the specified speed and load characteristics. It does not reveal
the variation of individual parts but can assure combined satisfactory performance of all parts put
together. Both manufacturers and purchasers can do this, if large number of articles is needed at
regular intervals. This is also called assembly inspection.
FIRST PIECE OR FIRST-OFF INSPECTIONS

First piece of the shift or lot is inspected. This is particularly used where automatic machines are
employed. Any discrepancy from the operator as machine tool can be checked to see that the
product is within in control limits. Excepting for need for precautions for tool we are check and
disturbance in machine set up, this yields good result if the operator is careful.
PILOT PIECE INSPECTION
This is done immediately after new design or product is developed. Manufacturer of product is
done either on regular shop floor if production is not disturbed. If production is affected to a
large extent, the product is manufactured in a pilot plant. This is suitable for mass production and
products involving large number of components such as automobiles aero planes etc., and
modification are design or manufacturing process is done until satisfactory performance is
assured or established.
FINAL INSPECTION
This is also similar to functional or assembly inspection. This inspection is done only after
completion of work. This is widely employed in process industries where there are not possible
such as, electroplating or anodizing products. This is done in conjunction with incoming material
inspection.
• Methods of Inspection
There are two methods of inspection. They are: 100% inspection and sampling inspection.
100% INSPECTION
This type will involve careful inspection in detail of quality at each strategic point or stage of
manufacture where the test is involved is non-destructive and every piece is separately inspected.
It requires more number of inspectors and hence it is a costly method. There is no sampling
error. This is subjected to inspection error arising out of fatigue, negligence, difficulty of
supervision etc.
Hence, completer accuracy of influence is seldom attained. It is suitable only when a small
number of pieces are there or a very high degree of quality is required. Example: Jet engines,
aircraft, medical and scientific equipment.
SAMPLING INSPECTION
In this method randomly selected samples are inspected. Samples taken from different patches of
products are representatives. If the sample proves defective, the entire concerned is to be rejected
or recovered. Sampling inspection is cheaper and quicker. It requires less number of Inspectors.
It is subjected to sampling errors but the magnitude of sampling error can be estimated.
In the case of destructive test, random or sampling inspection is desirable. This type of
inspection governs wide currency due to the introduction of automatic machines or equipments
which are less susceptible to chance variable and hence require less inspection, suitable for
inspection of products which have less precision importance and are less costly. Example:
Electrical bulbs, radio bulbs, washing machine etc.
Drawbacks of Inspection
Following are the disadvantages of inspection:
• Inspection adds to the cost of the product but not for its value.
• It is partially subjective, often the inspector has to judge whether a products passes or not.
• Fatigue and Monotony may affect any inspection judgment.
• Inspection merely separates good and bad items. It is no way to prevent the production of
bad items.
Acceptance Sampling,
The objective of acceptance sampling is to take decision whether to accept or reject a lot based
on sample’s characteristics. The lot may be incoming raw materials or finished parts. An
accurate method to check the quality of lots is to do 100% inspection. But, 100% inspection will
have the following limitations:
The cost of inspection is high.
Destructive methods of testing will result in 100% spoilage of the parts.
Time taken for inspection will be too long.
When the population is large or infinite, it would be impossible or impracticable to inspect each
unit.
Hence, acceptance-sampling procedure has lot of scope in practical application. Acceptance

sampling can be used for attributes as well as variables.
Acceptance sampling deals with accept or reject situation of the incoming raw materials and
finished goods. Let the size of the incoming lot be N and the size of the sample drawn be n. The
probability of getting a given number of defective goods parts out a sample consisting of n pieces
will follow binomial distribution. If the lot size is infinite or very large, such that when a sample
is drawn from it and not replaced, then the usage of binomial distribution is justified. Otherwise,
we will have to use hyper-geometric distribution.
Specifications of a single sampling plan will contain a sample size (n) and an acceptance number
C. As an example, if we assume the sample size as 50 and the acceptance number as 3, the
interpretation of the plan is explained as follows: Select a sample of size 50 from a lot and obtain
the number of defective pieces in the sample. If the number of defective pieces is less than or
equal to 3, then accept the whole lot from which the sample is drawn. Otherwise, reject the
whole lot. This is called single sampling plan. There are several variations of this plan.
In this process, one will commit two types of errors, viz., type-I error and type-II error. If the lot
is really good, but based on the sample information, it is rejected, and then the supplier/producer
will be penalized. This is called producer’s risk or type-I error. The notation for this error is a .
On the other hand, if the lot is really bad, but it is accepted based on the sample information, then
the customer will be at loss. This is called consumer’s risk or type-II error. The notation for this
error is ß. So, both parties should jointly decide about the levels of producer’s risk (a) and
consumer’s risk (ß) based on mutual agreement.
Control Charts
SPC is implemented through control charts that are used to monitor the output of the process and
indicate the presence of problems requiring further action. Control charts can be used to monitor
processes where output is measured as either variables or attributes. There are two types of
control charts: Variable control chart and attribute control chart.
Variable control charts: It is one by which it is possible to measures the quality characteristics of
a product. The variable control charts are X-BAR chart, R-BAR chart, SIGMA chart.
Attribute control chart: It is one in which it is not possible to measures the quality characteristics
of a product, i.e., it is based on visual inspection only like good or bad, success or failure,
accepted or rejected. The attribute control charts are p-charts, np-charts, c-charts, u-charts. It
requires only a count of observations on characteristics e.g., the number of nonconforming items
in a sample.
CHARACTERISTICS OF CONTROL CHARTS
A control chart is a time-ordered diagram to monitor a quality characteristic, consisting of:
A nominal value, or centre line, the average of several past samples.
Two control limits used to judge whether action is required, an upper control limit (UCL) and a
lower control limit (LCL).
Data points, each consisting of the average measurement calculated from a sample taken from
the process, ordered overtime. By the Central Limit Theorem, regardless of the distribution of
the underlying individual measurements, the distribution of the sample means will follow a
normal distribution. The control limits are set based on the sampling distribution of the quality
measurement.
BENEFITS OF USING CONTROL CHARTS
Following are the benefits of control charts:
• A control chart indicates when something may be wrong, so that corrective action can be
taken.
• The patterns of the plot on a control chart diagnosis possible cause and hence indicate
possible remedial actions.
• It can estimate the process capability of process.
• It provides useful information regarding actions to take for quality improvement.
OBJECTIVES OF CONTROL CHARTS
Following are the objectives of control charts:
• To secure information to be used in establishing or changing specifications or in

determining whether the process can meet specifications or not.
• To secure information to be used on establishing or changing production procedures.
• To secure information to be used on establishing or changing inspection procedures or
acceptance procedures or both.
• To provide a basis for current decision during production.
• To provide a basis for current decisions on acceptance for rejection of manufacturing or
purchased product.
• To familiarize personnel with the use of control chart.
Total quality management (TQM): concepts and characteristics.

Now-a-days, customers demand products/services with greater durability and reliability at the most
economic price. This forces producers to strictly follow quality procedures right from design till shipment
and installation of the products. So that goal of any competitive industry is to provide a product or service
at the most economical costs, ensuring full customer satisfaction. This can be achieved through Total
Quality Management (TQM), because, quality is not a technical function, but a systemic process
extending throughout all phases of the business, e.g., marketing, design, development, engineering,
purchasing, production/operations.
As per Feigebaum, “Total Quality Management is an effective system of integrating the quality
development, quality maintenance and quality improvement efforts of various groups in an organization
so as to enable marketing, engineering, production and service at the most economical levels which allow
for full customer satisfaction”.
Benefits of TQM
The benefits of TQM can be classified into the following two categories:
1. Customer satisfaction oriented benefits.

2. Economic improvements oriented benefits.
Customer satisfaction oriented benefits:
The benefits under this category are listed below:
a) Improvement in product quality.

b) Improvement in product design.
c) Improvement in production flow.
d) Improvement in employee morale and quality consciousness.
e) Improvement of product service.
f) Improvement in market place acceptance.
Economic improvements oriented benefits:
The benefits under this category are as follows:
a) Reductions in operating costs.

b) Reductions in operating losses.
c) Reductions in field service costs.
d) Reductions in liability exposure.
• 7 Important Principles of Total Quality Management
Total Quality Management (TQM) is an approach that organizations use to improve their internal
processes and increase customer satisfaction. When it is properly implemented, this style of management
can lead to decreased costs related to corrective or preventative maintenance, better overall performance,
and an increased number of happy and loyal customers.
However, TQM is not something that happens overnight. While there are a number of software solutions
that will help organizations quickly start to implement a quality management system, there are some
underlying philosophies that the company must integrate throughout every department of the company
and at every level of management. Whatever other resources you use, you should adopt these seven
important principles of Total Quality Management as a foundation for all your activities.
1. Quality can and must be managed
Many companies have wallowed in a repetitive cycle of chaos and customer complaints. They believe that
their operations are simply too large to effectively manage the level of quality. The first step in the TQM
process, then, is to realize there is a problem and that it can be controlled.
2. Processes, not people, are the problem
If your process is causing problems, it won’t matter how many times you hire new employees or how
many training sessions you put them through. Correct the process and then train your people on these new
procedures.
3. Don’t treat symptoms, look for the cure
If you just patch over the underlying problems in the process, you will never be able to fully reach your
potential. If, for example, your shipping department is falling behind, you may find that it is because of
holdups in manufacturing. Go for the source to correct the problem.
4. Every employee is responsible for quality
Everyone in the company, from the workers on the line to the upper management, must realize that they
have an important part to play in ensuring high levels of quality in their products and services. Everyone
has a customer to delight, and they must all step up and take responsibility for them.
5. Quality must be measurable
A quality management system is only effective when you can quantify the results. You need to see how
the process is implemented and if it is having the desired effect. This will help you set your goals for the
future and ensure that every department is working toward the same result.
6. Quality improvements must be continuous
Total Quality Management is not something that can be done once and then forgotten. It’s not a
management “phase” that will end after a problem has been corrected. Real improvements must occur
frequently and continually in order to increase customer satisfaction and loyalty.
7. Quality is a long-term investment

Quality management is not a quick fix. You can purchase QMS software that will help you get things
started, but you should understand that real results won’t occur immediately. TQM is a long-term
investment, and it is designed to help you find long-term success.
Before you start looking for any kind of quality management software, it is important to make sure you
are capable of implementing these fundamental principles throughout the company. This kind of
management style can be a huge culture change in some companies, and sometimes the shift can come
with some growing pains, but if you build on a foundation of quality principles, you will be equipped to
make this change and start working toward real long-term success.
UNIT: 5
Work study: objectives and techniques of time study and motion study.
INTRODUCTION
Productivity has now become an everyday watch word. It is crucial to the welfare of industrial firm as
well as for the economic progress of the country. High productivity refers to doing the work in a shortest
possible time with least expenditure on inputs without sacrificing quality and with minimum wastage of
resources.
Work-study forms the basis for work system design. The purpose of work design is to identify the most
effective means of achieving necessary functions. This work-study aims at improving the existing and
proposed ways of doing work and establishing standard times for work performance.
Work-study is encompassed by two techniques, i.e., method study and work measurement.
“Method study is the systematic recording and critical examination of existing and proposed ways of
doing work, as a means of developing and applying easier and more effective methods and reducing
costs.”
“Work measurement is the application or techniques designed to establish the time for a qualified worker
to carry out a specified job at a defined level or performance.”
There is a close link between method study and work measurement. Method study is concerned with the
reduction of the work content and establishing the one best way of doing the job whereas work
measurement is concerned with investigation and reduction of any ineffective time associated with the job
and establishing time standards for an operation carried out as per the standard method.
Productivity is the quantitative relation between what we produce and we use as a resource to produce
them, i.e., arithmetic ratio of amount produced (output) to the amount of resources (input). Productivity
can be expressed as:
Productivity = Output
Input
Productivity refers to the efficiency of the production system. It is the concept that guides the
management of production system. It is an indicator to how well the factors of production (land, capital,
labour and energy) are utilised.
European Productivity Agency (EPA) has defined productivity as,

“Productivity is an attitude of mind. It is the mentality of progress, of the constant improvements of that
which exists. It is the certainty of being able to do better today than yesterday and continuously. It is the
constant adaptation of economic and social life to changing conditions. It is the continual effort to apply
new techniques and methods. It is the faith in progress.”
A major problem with productivity is that it means many things to many people. Economists determine it
from Gross National Product (GNP), managers view it as cost cutting and speed up, engineers think of it
in terms of more output per hour. But generally accepted meaning is that it is the relationship between
goods and services produced and the resources employed in their production.
Factors Influencing Productivity
Factors influencing productivity can be classified broadly into two categories: (A) controllable (or
internal) factors and (B) un-controllable (or external) factors.
(A) CONTROLLABLE (OR INTERNAL) FACTORS
1. Product factor: In terms of productivity means the extent to which the product meets output
requirements product is judged by its usefulness. The cost benefit factor of a product can be enhanced by
increasing the benefit at the same cost or by reducing cost for the same benefit.
2. Plant and equipment: These play a prominent role in enhancing the productivity. The increased
availability of the plant through proper maintenance and reduction of idle time increases the productivity.
Productivity can be increased by paying proper attention to utilisation, age, modernisation, cost,
investments etc.
3. Technology: Innovative and latest technology improves productivity to a greater extent. Automation
and information technology helps to achieve improvements in material handling, storage, communication
system and quality control. The various aspects of technology factors to be considered are:
(i) Size and capacity of the plant,
(ii) Timely supply and quality of inputs,
(iii) Production planning and control,
(iv) Repairs and maintenance,
(v) Waste reduction, and
(vi) Efficient material handling system.
4. Material and energy: Efforts to reduce materials and energy consumption brings about considerable
improvement in productivity.
1. Selection of quality material and right material.
2. Control of wastage and scrap.
3. Effective stock control.
4. Development of sources of supply.
5. Optimum energy utilisation and energy savings.
5. Human factors: Productivity is basically dependent upon human competence and skill. Ability to work
effectively is governed by various factors such as education, training, experience aptitude etc., of the
employees. Motivation of employees will influence productivity.
6. Work methods: Improving the ways in which the work is done (methods) improves productivity, work
study and industrial engineering techniques and training are the areas which improve the work methods,
which in term enhances the productivity.
7. Management style: This influence the organizational design, communication in organization, policy
and procedures. A flexible and dynamic management style is a better approach to achieve higher
productivity.
(B) UN-CONTROLLABLE (OR EXTERNAL) FACTORS
1. Structural adjustments: Structural adjustments include both economic and social changes. Economic
changes that influence significantly are:
(a) Shift in employment from agriculture to manufacturing industry,
(b) Import of technology, and
(c) Industrial competitiveness.
Social changes such as women’s participation in the labour force, education, cultural values, attitudes are
some of the factors that play a significant role in the improvement of productivity.
2. Natural resources: Manpower, land and raw materials are vital to the productivity improvement.
3. Government and infrastructure: Government policies and programmes are significant to productivity
practices of government agencies, transport and communication power, fiscal policies (interest rates,
taxes) influence productivity to the greater extent.
WORK STUDY
“Work study is a generic term for those techniques, method study and work measurement which are used
in the examination of human work in all its contexts. And which lead systematically to the investigation
of all the factors which affect the efficiency and economy of the situation being reviewed, in order to
effect improvement.”
Work study is a means of enhancing the production efficiency (productivity) of the firm by elimination of
waste and unnecessary operations. It is a technique to identify non-value adding operations by
investigation of all the factors affecting the job. It is the only accurate and systematic procedure oriented
technique to establish time standards. It is going to contribute to the profit as the savings will start
immediately and continue throughout the life of the product.
Method study and work measurement is part of work study. Part of method study is motion study, work
measurement is also called by the name ‘Time study’.
Advantages of Work Study
Following are the advantages of work study:
1. It helps to achieve the smooth production flow with minimum interruptions.
2. It helps to reduce the cost of the product by eliminating waste and unnecessary operations.
3. Better worker-management relations.
4. Meets the delivery commitment.

5. Reduction in rejections and scrap and higher utilisation of resources of the organization.
6. Helps to achieve better working conditions.
7. Better workplace layout.
8. Improves upon the existing process or methods and helps in standardisation and simplification.
9. Helps to establish the standard time for an operation or job which has got application in manpower
planning, production planning.
Objectives of Work Study:
The following are the objectives of work study:
1. Increased efficiency,
2. Better product quality,
3. To choose the fastest method to do a job,
4. To improve the working process,
5. Less fatigue to operators and workers,
6. Effective labour control,
7. Effective utilisation of resources,
8. To decide equipment requirements,
9. To pay fair wages,
10. To aid in calculating exact delivery,
11. To formulate realistic labour budgeting, and
12. To decide the required manpower to do a job.
Advantages of Work Study:

The advantages of work study are the following:
1. Work study ensures higher productivity,
2. Better working conditions with less fatigue,
3. Higher wages to workers,

4. Uniform production flow,
5. Job satisfaction and job security to workers,
6. Reduction in unit cost of production,
7. Quality products to consumers,
8. Fast delivery schedule,
9. Harmonious employer-employee relation, and
10. Better service to customers.
METHOD STUDY
Method study enables the industrial engineer to subject each operation to systematic analysis. The main
purpose of method study is to eliminate the unnecessary operations and to achieve the best method of
performing the operation.
Method study is also called methods engineering or work design. Method engineering is used to describe
collection of analysis techniques which focus on improving the effectiveness of men and machines.
According to British Standards Institution (BS 3138): “Method study is the systematic recording and
critical examination or existing and proposed ways or doing work as a means or developing and applying
easier and more effective methods and reducing cost.” Fundamentally method study involves the
breakdown of an operation or procedure into its component elements and their systematic analysis. In
carrying out the method study, the right attitude of mind is important.
The method study man should have:
1. The desire and determination to produce results.
2. Ability to achieve results.
3. An understanding of the human factors involved.
Method study scope lies in improving work methods through process and operation analysis, such as:
1. Manufacturing operations and their sequence.
2. Workmen.
3. Materials, tools and gauges.
4. Layout of physical facilities and work station design.
5. Movement of men and material handling.

6. Work environment.
Objectives of Method Study
Method study is essentially concerned with finding better ways of doing things. It adds value and
increases the efficiency by eliminating unnecessary operations, avoidable delays and other forms of
waste.
The improvement in efficiency is achieved through:
1. Improved layout and design of workplace.
2. Improved and efficient work procedures.
3. Effective utilization of men, machines and materials.
4. Improved design or specification of the final product.
The objectives of method study techniques are:
1. Present and analyze true facts concerning the situation.
2. To examine those facts critically.
3. To develop the best answer possible under given circumstances based on critical Examination of facts.
Principles of Motion study
There are a number of principles concerning the economy of movements which have been developed as a
result of experience and which forms the basis for the development of improved methods at the
workplace. These are first used by Frank Gilbreth, the founder of motion study and further rearranged and
amplified by Barnes, Maynard and others.
The principles are grouped into three headings:
(a) Use of the human body.
(b) Arrangement of workplace.
(c) Design of tools and equipment.

(A) USES OF HUMAN BODY
When possible:
1. The two hands should begin and complete their movements at the same time.
2. The two hands should not be idle at the same time except during periods of rest.
3. Motions of the arms should be made simultaneously.
4. Hand and body motions should be made at the lowest classification at which it is possible to do the
work satisfactorily.
5. Momentum should be employed to help the worker, but should be reduced to a minimum whenever it
has to be overcome by muscular effort.
6. Continuous curved movements are to be preferred to straight line motions involving sudden and
changes in directions.
7. ‘Ballistic’ (i.e., free swinging) movements are faster, easier and more accurate than restricted or
controlled movements.
8. Rhythm is essential to the smooth and automatic performance of a repetitive operation. The work
should be arranged to permit easy and natural rhythm wherever possible.
9. Work should be arranged so that eye movements are confined to a comfortable area, without the need
for frequent changes of focus.
(B) ARRANGEMENT OF THE WORKPLACE
1. Definite and fixed stations should be provided for all tools and materials to permit habit formation.
2. Tools and materials should be pre-positioned to reduce searching.
3. Gravity fed, bins and containers should be used to deliver the materials as close to the point of use as
possible.
4. Tools, materials and controls should be located within a maximum working area and as near to the
worker as possible.
5. Materials and tools should be arranged to permit the best sequence of motions.
6. ‘Drop deliveries’ or ejectors should be used wherever possible, so that the operative does not have to
use his hands to dispose of finished parts.
7. Provision should be made for adequate lightning, and a chair of type and height to permit good posture
should be provided. The height of the workplace and seat should be arranged to allow alternate standing
and seating.
(C) DESIGN OF TOOLS AND EQUIPMENTS
1. The colour of the workplace should contrast with that of work and thus reduce eye fatigue.
2. The hands should be relieved of all work of ‘holding’ the work piece where this can be done by a jig or
fixture or foot operated device.
3. Two or more tools should be combined where possible.
4. Where each finger performs some specific movement, as in typewriting, the load should be distributed
in accordance with the inherent capacities of the fingers.
5. Handles such as those used on screw drivers and cranks should be designed to permit maximum surface
of the hand to come in contact with the handle.
6. Levers, cross bars and wheel bars should be in such position that operator can manipulate them with
least body change and with greatest mechanical advantage.
WORK MEASUREMENT (TIME STUDY)
Work measurement is also called by the name ‘time study’. Work measurement is absolutely essential for
both the planning and control of operations. Without measurement data, we cannot determine the capacity
of facilities or it is not possible to quote delivery dates or costs. We are not in a position to determine the
rate of production and also labour utilisation and efficiency. It may not be possible to introduce incentive
schemes and standard costs for budget control.
Objectives of Work Measurement
The use of work measurement as a basis for incentives is only a small part of its total application.
The objectives of work measurement are to provide a sound basis for:
1. Comparing alternative methods.
2. Assessing the correct initial manning (manpower requirement planning).
3. Planning and control.
4. Realistic costing.
5. Financial incentive schemes.
6. Delivery date of goods.
7. Cost reduction and cost control.
8. Identifying substandard workers.
9. Training new employees.

Techniques of Work Measurement
For the purpose of work measurement, work can be regarded as:
1. Repetitive work: The type of work in which the main operation or group of operations repeat
continuously during the time spent at the job. These apply to work cycles of extremely short duration.
2. Non-repetitive work: It includes some type of maintenance and construction work, where the work
cycle itself is hardly ever repeated identically.
Various techniques of work measurement are:
1. Time study (stop watch technique),
2. Synthesis,
3. Work sampling,
4. Predetermined motion and time study,
5. Analytical estimating.
Time study and work sampling involve direct observation and the remaining are data based and analytical
in nature.
1. Time study: A work measurement technique for recording the times and rates of working for the
elements of a specified job carried out under specified conditions and for analysing the data so as to
determine the time necessary for carrying out the job at the defined level of performance. In other words
measuring the time through stop watch is called time study.
2. Synthetic data: A work measurement technique for building up the time for a job or pans of the job at
a defined level of performance by totalling element times obtained previously from time studies on other
jobs containing the elements concerned or from synthetic data.
3. Work sampling: A technique in which a large number of observations are made over a period of time
of one or group of machines, processes or workers. Each observation records what is happening at that
instant and the percentage of observations recorded for a particular activity, or delay, is a measure of the
percentage of time during which that activities delay occurs.
4. Predetermined motion time study (PMTS): A work measurement technique whereby times
established for basic human motions (classified according to the nature of the motion and conditions
under which it is made) are used to build up the time for a job at the defined level of performance. The
most commonly used PMTS is known as Methods Time Measurement (MTM).
5. Analytical estimating: A work measurement technique, being a development of estimating, whereby

the time required to carry out elements of a job at a defined level of performance is estimated partly from
knowledge and practical experience of the elements concerned and partly from synthetic data.
TIME STUDY
Time study is also called work measurement. It is essential for both planning and control of operations.
According to British Standard Institute time study has been defined as “The application of
techniques designed to establish the time for a qualified worker to carry out a specified job at a defined
level of performance.”
Steps in Making Time Study
Stop watch time is the basic technique for determining accurate time standards. They are economical for
repetitive type of work. Steps in taking the time study are:
1. Select the work to be studied.
2. Obtain and record all the information available about the job, the operator and the working conditions
likely to affect the time study work.
3. Breakdown the operation into elements. An element is a instinct part of a specified activity composed
of one or more fundamental motions selected for convenience of observation and timing.
4. Measure the time by means of a stop watch taken by the operator to perform each element of the
operation. Either continuous method or snap back method of timing could be used.
5. At the same time, assess the operators effective speed of work relative to the observer’s concept of
‘normal’ speed. This is called performance rating.
6. Adjust the observed time by rating factor to obtain normal time for each element
Normal = Observed time × Rating
100
7. Add the suitable allowances to compensate for fatigue, personal needs, contingencies. etc. to give
standard time for each element.
8. Compute allowed time for the entire job by adding elemental standard times considering frequency of
occurrence of each element.
9. Make a detailed job description describing the method for which the standard time is established.
10. Test and review standards wherever necessary. The basic steps in time study are represented by a
block diagram below.
Allowances
The normal time for an operation does not contain any allowances for the worker. It is impossible to
work throughout the day even though the most practicable, effective method has been developed. Even
under the best working method situation, the job will still demand the expenditure of human effort and
some allowance must therefore be made for recovery from fatigue and for relaxation. Allowances must
also be made to enable the worker to attend to his personal needs.
The allowances are categorized as:
(1) Relaxation allowance, (2) Interference allowance, and (3) Contingency allowance.
1. RELAXATION ALLOWANCE: Relaxation allowances are calculated so as to allow the worker to

recover from fatigue. Relaxation allowance is a addition to the basic time intended to provide the worker
with the opportunity to recover from the physiological and psychological effects of carrying out specified
work under specified conditions and to allow attention to personal needs. The amount of allowance will
depend on nature of the job. Relaxation allowances are of two types: fixed allowances and variable
allowances.
FIXED ALLOWANCES CONSTITUTE:
(a) Personal needs allowance: It is intended to compensate the operator for the time necessary to leave,
the workplace to attend to personal needs like drinking water, smoking, washing hands. Women require
longer personal allowance than men. A fair personal allowance is 5% for men, and 7% for women. (b)
Allowances for basic fatigue: This allowance is given to compensate for energy expended during
working. A common figure considered as allowance is 4% of the basic time.
VARIABLE ALLOWANCE: Variable allowance is allowed to an operator who is working under poor
environmental conditions that cannot be improved, added stress and strain in performing the job. The
variable fatigue allowance is added to the fixed allowance to an operator who is engaged on medium and
heavy work and working under abnormal conditions. The amount of variable fatigue allowance varies
from organization to organization.
2. INTERFERENCE ALLOWANCE: It is an allowance of time included into the work content of the
job to compensate the operator for the unavoidable loss of production due to simultaneous stoppage of
two or more machines being operated by him. This allowance is applicable for machine or process
controlled jobs.
Interference allowance varies in proportion to number of machines assigned to the operator. The
interference of the machine increases the work content.
3.CONTINGENCY ALLOWANCE
A contingency allowance is a small allowance of time which may be included in a standard time to meet
legitimate and expected items of work or delays. The precise measurement of which is uneconomical
because of their infrequent or irregular occurrence. This allowance provides for small unavoidable delays
as well as for occasional minor extra work: Some of the examples calling for contingency allowance are:
Tool breakage involving removal of tool from the holder and all other activities to insert new tool into the
tool holder. Power failures of small duration. Obtaining the necessary tools and gauges from central tool
store. Contingency allowance should not exceed 5%.
4. POLICY ALLOWANCE
Policy allowances are not the genuine part of the time study and should be used with utmost care and
only in clearly defined circumstances. The usual reason for making the policy allowance is to line up
standard times with requirements of wage agreement between employers and trade unions. The policy
allowance is an increment, other than bonus increment, applied to a standard time (or to some constituent
part of it, e.g., work content) to provide a satisfactory level of earnings for a specified level of
performance under exceptional circumstances. Policy allowances are sometimes made as imperfect
functioning of a division or part of a plant.
ILLUSTRATION 1:
Assuming that the total observed time for an operation of assembling an electric
switch is 1.00 min. If the rating is 120%, find normal time. If an allowance of 10%
is allowed for the operation, determine the standard time.
SOLUTION:
Obsessed time (or) selected time = 1.00 min
Rating = 120%
Allowance = 10%
As we know that,
Normal time = Observed time × Rating / 100
= 1.00 × 120 ÷ 100 = 1.20 min
Allowance @ 10% = 1.20 × 10 ÷ 100 = 0.12 min
∴ Standard time = Normal time + Allowances
= 1.20 + 0.12
= 1.32 min.
ILLUSTRATION 2:
An operator manufactures 50 jobs in 6 hours and 30 minutes. If this time includes

the time for setting his machine. Calculate the operator’s efficiency. Standard time
allowed for the job was:
Setting time = 35 min
Production time per piece = 8 min
SOLUTION:
As standard time = Set up time + Time per piece × No. of pieces produced
∴ Standard time for manufacturing 50 jobs = 35 + 8 × 50 = 435 min

= 7 hours and 15 min.
Efficiency of operator = Standard time × 100 ÷ Actual time
= 435× 100 ÷ 390
= 111.5%.
ILLUSTRATION 3:
Find out the standard time using the following data: Average time for machine
elements = 6 min
Average time for manual elements = 4 min
Performance rating = 110%
Allowances = 10%
SOLUTION:
Normal time = Machinery time + Manual time × Rating
= 6 + 4 × 1.1 = 6 + 4.4 = 10.4 min
∴ Standard time = Normal time + Allowances
= 10.4 + 10.4 × 10 ÷ 100
= 10.4 (1 + 0.1)
= 11.44 min.
ALL THE BEST FOR YOUR EXAMS
…………………………………………THANK YOU………………………………………………

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DISHA COLLEGE BBA IV Sem

DISHA COLLEGE BBA IV Sem

1. Industrial Engineering; Hazra.

2. Production management anita soni.

3. Production management; Buffa

Previous year questions

1. What is production management? Give its scope, objectives and importance.

1. Define capacity Planning?describe various steps involve in cap capacity Planning.

9. Explain the following:

1. “Work study is a powerful tool for improving productivity”. Explain

Production management is a branch of management which is related to the production function.

Globalization• International outsourcing• Local outsourcing• Contract manufacturing• Trend toward

Production is an intentional act of producing something in an organized manner. It is the fabrication of a

(i) Optimum use of resources at optimum cost.

Production management is a branch of management which is related to the production function.

Elwood S. Buffa has defined the term in a broader sense as :

Production management, thus, is assigned with the following tasks –

❖ Objectives Of The Production Management

4. RIGHT MANUFACTURING COST

Characteristics of production management

2. Related to the production process.

3. Production Management is a set of general principles for production

 Differences between Manufacturing vs. Production

SCOPE OF PRODUCTION MANAGEMENT

1. Product Selection and Design :

2. Activities Relating to Production System Designing :

5. Facilities Layout and Materials Handling :

Thus production control involves the following stages :

(i) Planning — setting targets of production.

(ii) Routing — to decide the route or flow-of production activity.

(iii) Control of work-in-progress through production control.

10. Quality control :

11. Maintenance and Replacement :

12. Cost Reduction and Control :

2. Plant Layout & material handling

5. Production Planning & Controlling ( P.P.C)

Functions of production management

The components or functions of production management are as follows:

1. Selection of Product and Design,

The above functions of production management are briefly discussed below.

1. Selection of Product and Design

2. Selection of Production Process

3. Selecting Right Production Capacity

6. Quality and Cost Control

8. Maintenance and Replacement of Machines

Importance of Production Management

4. Accomplishment of Firm’s Objectives: Production management helps the business organization to

7. Optimum Utilization of Resources: Production management facilitates optimum utilization of

Problems of Production Management

(i) Inventory control—Decisions should be made regarding inventory at demand.

(ii) Production control—Decisions should be made relating to allocation of productive capacity

Responsibilities of a Production Manager

Some of the major responsibilities of a production manager are:

(1) Production planning (5) Inventory control

(2) Production control (6) Plant layout

(3) Quality control (7) Work measurement

(4) Method analysis (8) Other functions:

(1) Production planning:

(2) Production control:

(3) Quality control:

(4) Method analysis:

(5) Inventory control:

(6) Plant layout: